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Health Law’s 8 Changes That Begin Today — And 7 Caveats

If you’ve tuned out the health care law you might want to tune back in.

A set of new consumer protections goes into effect today, the six-month anniversary of the law.

Here’s a guide to some of the changes – and some of the caveats. Keep in mind that how they affect you will depend on what kind of insurance you have.

Insurers must allow parents to keep an adult child up to age 26 on their health plan and those young adults can’t be charged more than any other dependent. Some insurers began this policy early — during the summer.
BUT: This doesn’t begin until your new plan year begins – for many, that will be Jan. 1, 2011. And, if your child has an offer of coverage from an employer, he/she might not be able to be on your plan.

Insurers can’t charge co-pays or deductibles for preventive services such as breast cancer screening and cholesterol tests.
BUT: “Grandfathered” plans – those that don’t make major changes from the previous plan year — don’t have to follow this requirement.

Insurers must cover children up to age 19 with a preexisting medical condition. New individual plans and all group plans — such as those you get at work — can’t refuse to cover a child.
BUT: “Grandfathered” individual health plans can refuse to cover a child.

Insurers cannot cancel coverage once you get sick, a practice known as “rescission.”
BUT: If you committed outright fraud and intentionally hid something, your insurer can refuse to pay.

Consumers get direct access to physicians: You – not your insurance company – decide which primary physician, gynecologist, obstetrician and pediatrician you see among your plan’s list of approved providers.
BUT: The usual obstacles remain, like whether the doctor is taking new pateints or has an appointment opening available.

No additional payments can be required for out-of-network emergency room care: Insurers cannot require higher co-payments or deductibles if you have a medical emergency and seek treatment at an emergency room that’s not in your health insurance plan.
BUT: Once again, “grandfathered” plans are exempted.

Annual limits on coverage will be going away.
BUT: First, they’ll be raised to $750,000 for all employer plans and new individual plans, rising to $1.25 million after Sept. 23 of 2011 and then to $2 million the following September.

No lifetime limits: All plans, even “grandfathered” plans will be prohibited from setting dollar limits on lifetime coverage.
NO “But” on this one!

While the following provisions of the health law have been around for a while they’re worth noting, too:

High-Risk Pools: Designed to help people who have been uninsured for six months get coverage. Each state has its own pool.

Help to Companies Paying for Early Retirees: More than 2,000 employers and unions have applied for government grants to cover up to 80 percent of retirees’ medical costs between $15,000 and $90,000 until they can qualify for Medicare coverage.

Small Business Tax Credits: Small businesses with 25 or fewer full-time employees who earn an average yearly salary of $50,000 or less will qualify for a tax credit of up to 35 percent of the cost of premiums. That credit will rise to 50 percent in 2014. To qualify, businesses must cover at least 50 percent of the cost of workers’ insurance.

Source: http://www.kaiserhealthnews.org/Stories/2010/September/23/8-changes-health-reform.aspx

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Are grandfathered health plans dead?

If we heard it once, we heard it a million times: “If you like your health plan, you can keep it.”

Throughout the 2008 presidential campaign and during the subsequent debate about the health reform bill, President Obama repeatedly said that the new change to the health care system wouldn’t affect people’s current policies; instead, they could keep their plan and keep their doctors.

The Patient Protection and Affordable Care Act, as we all know, was signed into law on March 23. And, as promised, the new legislation contains a grandfathering provision, which ensures that Americans can keep their policy. [See related: Agencies set rules on grandfathered health plans] So the administration remained true to its word, but after reading the guidelines released by the Department of Health and Human Services in mid-June, a lot of people are crying foul.

You see, when Obama signed the bill, we knew what the law said, but as with much of the mammoth health care bill, the details still needed to be worked out. So, while Kathleen Sebelius and her team at DHHS were busy figuring out what changes would be allowed, the rest of us could only speculate.

And that wasn’t easy for employers with April, May, or June renewal dates, who had to make decisions about their coverage without yet knowing the rules. As a result, many groups already lost their grandfathered status.

At long last, on June 14, the wait was finally over. In a press release, DHHS let the public know what changes a “grandfathered” plan would be allowed to make. I don’t believe I was the only one surprised by what I read.

PPACA makes a number of plan changes in both the group and individual markets. In order to stay grandfathered and avoid some of the new changes, a health plan that was in effect on March 23 CANNOT:

  • Significantly cut or reduce benefits
  • Raise coinsurance charges (at all)
  • Significantly raise copayment charges (by significant they mean more than $5)
  • Significantly raise deductibles (anything more than about 20 percent)
  • Significantly lower employer contributions (more than 5 percent)
  • Add or tighten an annual limit on what the insurer pays
  • change insurance companies (even if you’re going with an identical plan)

Given that most carriers don’t allow you to raise your copayments by $5 at a time or increase your deductible in $100 increments, it looks like grandfathered plans are pretty much stuck with what they’ve got. And since most companies don’t just renew as is year after year, it does make you wonder – is grandfather dead?

By the government’s own projections, the answer to this question is probably yes. According to the DHHS fact sheet about keeping the plan you have, between 36 percent and 66 percent of large employers will still be grandfathered in 2013, a year before many of required plan changes – including the essential benefits package – go into effect. Between 20 percent and 51 percent of small businesses will still have grandfathered status as of 2013.

While many employers struggle to decide whether it makes sense to eat the renewal increases and hang on to their plan, it’s also worth mentioning that many of the changes, such as the elimination of annual and lifetime limits, prohibition on rescissions, extension of parents’ coverage to children up to age 26, and a 90 day limit on new hire waiting periods, are required whether or not a plan is grandfathered – that’s the “patient protection” part of the bill. The government thought these changes were so important that they’re making everyone do them.

So what, as an agent, should you advise your clients? That’s up to you, but my guess is that the extra amount most companies would pay to maintain their grandfathered status year after year will be more than they would pay by going with one of the new plans. The new benefits that go into effect after Sept. 23 will be factored into the carriers’ pricing, so my advice is to compare all of the options just like you’ve always done and recommend accordingly.

Two final notes: 1) Employers who made a plan change between March 23 and June 14 can return to their previous plan and remain grandfathered. 2) The credit for the title of this month’s column belongs to my company’s president, Craig Keohan. He asked the question during a recent sales meeting and I thought it was hilarious.

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Early Retiree Reinsurance Program: Tennessee

Rising health care costs have made it difficult for employers to provide quality, affordable health insurance for workers and retirees while also remaining competitive in the global marketplace. The percentage of large firms providing workers with retiree health coverage has dropped from 66 percent in 1988 to 29 percent in 2009.1 Health insurance premiums for older Americans are over four times more expensive than they are for young adults,2 and the deductible these enrollees pay is, on average, almost four times that for a typical employer-sponsored insurance plan.3

The Affordable Care Act creates a new program called the Early Retiree Program to help address this challenge that employers and older employees are facing.  The Early Retiree Reinsurance Program provides $5 billion in financial assistance to employers and unions to help them maintain coverage for early retirees age 55 and older who are not yet eligible for

Businesses, other employers, and unions that are accepted into the program will receive reimbursement for medical claims for early retirees and their spouses, surviving spouses, and dependents. Savings can be used to reduce employer health care costs, provide premium relief to workers and families, or both. Applicants who are approved into the program receive reinsurance for the claims of high-cost retirees and their families (80 percent of the costs from $15,000 to $90,000). The program ends on January 1, 2014 when State health insurance Exchanges are up and running.

HHS has approved the following sponsors from Tennessee. More applications are being approved each day.

  • Aerospace Contractors’ Trust
  • Aerospace Testing Alliance
  • Alabama Laborers Health and Welfare Fund
  • Arlington County School Board
  • Babcock & Wilcox Technical Services Y-12, LLC
  • BlueCross BlueShield of Tennessee
  • City of Morristown
  • Cleveland Utilities, Dept. of City of Cleveland
  • County of Rutherford, Office of the Budget Director
  • Eastman Chemical Company
  • Electric Power Board of Metropolitan Nashville & Davidson County
  • Federal Express Corporation
  • First Horizon Natonal Corporation
  • General Shale Brick, Inc.
  • Hamilton County Department of Education
  • IBEW 915 Health and Welfare Fund
  • IBEW Local 666 Benefit Trust Fund
  • International Paper Company
  • Johnson City Power Board
  • Knoxville Utilities Board
  • Louisiana Electrical Heath and Welfare Fund
  • Louisiana Laborers Health and Welfare Fund
  • Louisiana-Pacific Corporation
  • MAHLE Industries, Incorporated
  • NGK Metals Corporation
  • Nissan North America, Inc.
  • Operating Engineers Local 474 Health and Welfare Fund
  • Pirelli Armstrong Tire Retiree Medical Benefits Trust
  • Plumbers and Steamfitters Local 150 Health and Welfare Fund
  • Sheet Metal Workers Local 15 Medical
  • Sheet Metal Workers Local 177 Health and Welfare Fund
  • Sheet Metal Workers’ Local 4 Health and Welfare Fund
  • Sheet Metal Workers’ National Health Fund
  • Southeast Laborers Health Fund
  • Southeastern Carpenters and Milwrights Health Fund
  • Southeastern Pipetrades Health and Welfare Fund
  • Southern Operators Health Fund
  • State of Tennessee
  • Tennessee Valley Operating Engineers Health
  • UA Local 614 Health and Welfare Fund

[1] Kaiser / HRET. Employer Health: 2009 Survey.
[2] Center for Policy and Research. Individual Health Insurance 2009.
[3] Kaiser Family Foundation. 2010. Survey of People Who Purchase Their Own Insurance.

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W-2 Reporting Requirements

Under the Patient Protection and Affordable Care Act (“PPACA”), employers will be required to calculate and report the aggregate cost of applicable employer-sponsored health insurance coverage on employees’ Form W-2s for taxable years beginning Jan. 1, 2011.  However, because the Internal Revenue Code allows employees to request their Form W-2s earlier than required if they terminate employment during the year, employers should be ready to implement this change in early 2011.  This reporting requirement is for informational purposes only; the amount reported does not affect the employer or employee’s tax liability.

The Internal Revenue Service has yet to issue regulations or guidance regarding this new requirement.  As such, this information is subject to possible change or clarification.

The coverage costs that must be reported under the new requirement include medical plans – including vision or dental benefits to the extent they are integrated into the medical plan – and pharmacy plans.

The following employer-provided benefits are not required to be reported on Form W-2 under PPACA:

  • Long-term care, accident or disability income benefits
  • Liability insurance
  • Workers compensation insurance
  • Specific disease or illness policies (such as cancer policies) and hospital (or other) indemnity insurance policies where the full premium is paid by the employee on an after-tax basis
  • Archer medical savings account (“MSA”) or health savings account “(”HSA”) contributions of the employee or the employee’s spouse
  • Salary reduction contributions to a health flexible spending account (“FSA”)
  • Stand-alone fully insured vision or dental plans[1]

In determining the value of health insurance coverage, the employer must calculate the applicable premiums for the taxable year for such health coverage for the employee under the rules for COBRA continuation coverage under IRC Sec. 4980B(f)(4) and accompanying Treasury regulations. The value that the employer is required to report is the aggregate COBRA premium excluding the administrative fee (2 percent maximum), not just the portion of the premium that the employee or employer pays.

Employers should contact their tax or payroll professionals for answers to specific questions about implementing this IRS requirement.

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Chicken Florentine Artichoke Bake

3 ½ CUPS DRIED BOW TIE PASTA

1/3 CUP CHOPPED ONION (1 SMALL)

1 TABLESPOON BUTTER

2 EGGS, LIGHTLY BEATEN

1 ¼ CUPS MILK

1 TABLESPOON FRESH OREGANO OR 1 TEASPOON DRIED ITALIAN SEASONING

½ TEASPOON SALT, ¼ TEASPOON CRUSHED RED PEPPER, ¼ TEASPOON BLACK PEPPER

2 CUPS CHOPPED COOKED CHICKEN

2 CUPS SHREDDED MONTERAY JACK CHEESE (8 OUNCES)

1 (14 OUNCE) CAN ARTICHOKE HEARTS, DRAINED AND QUARTERED

1 (10 OUNCE) PACKAGE FROZEN CHOPPED SPINACH, THAWED AND WELL DRAINED

½  CUP OIL-PACKED DRIED TOMATOES, DRAINED AND CHOPPED

¼ CUP GRATED PARMESAN CHEESE

½ CUP COARSE DRIED BREAD CRUMBS

½ TEASPOON PAPRIKA

1 TABLESPOON BUTTER, MELTED

 

PREHEAT OVEN TO 350 DEGREES.  COOK PASTA ACCORDING TO DIRECTIONS; DRAIN.

MEANWHILE, IN MEDIUM SKILLET, COOK ONION  IN 1 TABLESPOON BUTTER OVER MEDIUM HEAT ABOUT 5 MINUTES OR UNTIL TENDER.  IN A BOWL, COMBINE EGGS, MILK, HERBS, SALT AND PEPPERS.  STIR IN COOKED PASTA, ONION, CHICKEN, CHEESE, ARTICHOKES, SPINACH, SUNDRIED TOMATOES AND 2 TABLESPOONS OF THE PARMESAN CHEESE.TRANSFER TO AN UNGREASED 3 QUART BAKING DISH.  BAKE, COVERED FOR 20 MINUTES.  IN A SMALL BOWL, COMBINE THE REMAINING 2 TABLESPOONS PARMESAN CHEESE, BREAD CRUMBS, AND PAPRIKA.  DRIZZLE WITH MELTED BUTTER.  SPRINKLE CRUMB MIXTURE OVER PASTA MIXTURE.  BAKE, UNCOVERED FOR 10 MORE MINUTES.

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