Pre-Existing Conditions – High Risk Pool

Q – Am I reading that adults who cannot get health coverage due to a pre-existing condition can join a high risk pool? How would they go about getting that done?

A – There is supposed to be a “state” high risk pool effective July 1st of this year. The individual wanting to join must not have had coverage for the previous 6 months due to a pre-existing condition. No details on the pool are available at this time.

Q – By removing preexisting clause can someone on a group policy shop around for individual coverage and a better rate or does that person with the preexisting condition have to go into the high risk pool? 

A – Yes, they can go into the high risk pool but by going off of the group plan they will lose the employer contribution. The high risk pool is only available from July 1, 2010 until Jan 1, 2014 (the same time pre-existing conditions go away and Exchanges begin). Also, to be eligible for the high risk pool the enrollee must be without coverage for the previous 6 months (or longer) and have a pre-existing condition.

Q – I have a current client that was asking about options for her, due to the new legislation since she has preexisting conditions? I was not sure how it applied. I thought it was not active until the year 2014. 

A – Pre-existing conditions will not be eliminated for adults until 2014. However, there will be a high risk pool as of July 1, 2010. The high risk pool is for individuals who have not had coverage for at least 6 months and have a pre-existing condition. No information on how to enroll in the high risk pool is available at this time.

Q – Pre-existing beginning 6/14/10 coverage will be available to individuals who have been uninsured for at least 6 months through high risk pool programs in every state. Does this mean if someone is on a portability plan they can now go on a regular plan, regular individual rates 6/14?

A – What they are talking about is the “high risk pool” that’s going to be available as of 7/1. This pool will either be operated by the State or if the State chooses, they may utilize the Federal high risk pool. But, the person must be 6 months bare. Recent clarification indicates that if an individual has health insurance (it appears of any kind) they cannot access the high risk pool. The belief is this includes a HIPAA portability product – so no, they would not have access.

Employers paying Individual Plans

Q – What impact is on the employers who pay for individual plans for their employees? Will they be penalized for not having a group plan or does this qualify?

A – There is no mandate that employers sponsor a group health plan.

However, if any of the employees go to the exchange AND receive a tax credit – yes, the employer will have a penalty. 

CLASS Act

Q – Any simple explanation of the CLASS act in the legislation?

A – CLASS is a voluntary long term care insurance program designed to assist participants to maintain home and community living arrangements. It is effective Jan 1, 2011.

There is no underwriting except based on age to determine premiums and eligibility for the program. Enrollment is automatic through the employer, if the employer offers the program. Employees must opt-out if they do not wish to enroll. Employees may opt out at anytime and qualified individuals who are eligible to enroll may do so at anytime. To be eligible, the participant must be 18 years or older, receive taxed wages or taxed self-employment income, and be actively employed.

Miscellaneous

Q – My understanding is that any child 26 or under is now able to be on their parent’s policy. Is this correct? What are the guidelines?

A – Right now most of the carriers have said if an adult child under age 26 is currently on the plan (either individual or group) they may stay on that plan until age 26. However, if an adult child has already aged off the plan, i.e. last year they graduated from college and were no longer eligible – there is no clarification that they must be allowed back onto their parents plan mid-year. They will be allowed to come back on during open enrollment however. The law does not go info effect until the first plan year after September 23, 2010; however, most of the carriers are implementing this provision immediately.  

Q – Do you know if the change to FSA accounts – Over the Counter Drugs – takes effect Jan. 1, 2011 or upon plan year following Jan. 1, 2011?

A – This is effective the first tax year following 2010 – so Jan 1, 2011.

Q – If an employer only changes their plan year and does nothing to plan design, will it impact their “grandfathered” status?

A – The legislation is silent on this situation. However, since there are no changes to plan design the presumption is that it would not impact their “grandfathered” status.

 Q – What is my responsibility as an employer regarding nursing mothers?

A- Effective immediately (March 23, 2010), employers must now provide nursing mothers reasonable unpaid break time to express milk, for a period of up to one year following a child’s birth.

Assistance Eligible Individuals (AEIs) are still eligible for 15 months of a 65% COBRA subsidy.

An Assistance Eligible Individual (AEI) is an employee or an employee’s spouse/dependent(s) who elects COBRA coverage following a qualifying event (QE) related to an involuntary termination of employment that occurs at any point from:

September 1, 2008 through May 31, 2010; or

March 2, 2010 through May 31, 2010 if:

the involuntary termination follows a QE that was a reduction of hours; and the reduction of hours occurred at any time from September 1, 2008 through May 31, 2010 (a reduction of hours is a QE when the employee and his/her spouse/dependent(s) lose coverage because the employee, though still employed, is no longer working enough hours to satisfy the employer health plan’s eligibility requirements).

The maximum period of continuation coverage is measured from the date of the original qualifying event (generally 18 months). However, ARRA, as amended, provides that the 15 month premium reduction (ARRA subsidy) period begins on the first day of the first period of coverage for which an individual is “assistance eligible.” This is of particular importance to individuals who experience an involuntary termination following a reduction of hours. Only individuals who have additional periods of COBRA (or state continuation) coverage remaining after they become AEIs are entitled to the 65% subsidy.

Because the latest changes are retroactive to April 1, 2010, all qualified beneficiaries who are AEIs with qualifying events between April 1, 2010 and April 19, 2010 have to get updated ARRA notifications.

There are many new requirements that are taking effect which includes updated notifications and reporting. The Department of Labor has posted new general notices on their site and we will also have these on file should you need them. Click on the link below for frequently asked questions and to download these new documents:

Updated General Notices

FAQ’s, Employer Responsibilities

Willis & Associates has always been a free resource to our clients when it comes to COBRA administration but as more legislation is passed; our COBRA eligible employers will likely need to retain a COBRA Administrator with more experience in this area. With this in mind, we researched several TPA’s and found a company that is not only affordable, but credible with an excellent customer service record. The TPA we would recommend is Ameriflex, they take the liability of COBRA administration, compliance and reporting out of your hands. Ameriflex offers groups with 75 covered employees or less full COBRA administration for $75 a month. If you are an employer with over 75 covered employees, we can get a custom quote for you. For more information about Ameriflex and their COBRA administration products, please call our office.

Small business tax credits
Beginning in 2010, small businesses with fewer than 25 employees and average wages of less than $50,000 get a tax credit for their contributions to buying health insurance for employees. The tax credit starts at up to 35 percent and increases to 50 percent in 2014 when the exchange is operational. A full tax credit may be available to small businesses with fewer than 10 employees and average wages of less than $25,000. There has been no direction on the process of how to apply for the tax credit at this time but as we learn more we will let you know.  

Health plan changes
Under the new law, individuals and employers/employees have the right to keep the coverage they had as of March 23, 2010 and are exempt from many reforms. These individual and group health plans are considered “grandfathered plans.” Collectively bargained plans that were ratified before the date of enactment are grandfathered until the date that the last collective bargaining agreement related to coverage ends.

Effective immediately the Department of Health and Human Services (HHS) will establish a process for federal review of fully insured premium rate increases.

Effective six months from the date of enactment – late September – provisions that affect employer-sponsored health plans will begin. Here is a high-level summary of what you need to know about the changes:

Effective for new plans or plans renewed six months after the enactment date unless otherwise noted (includes ‘grandfathered’ plans)-

Lifetime and annual limits: Plans will no longer impose lifetime limits on the dollar value of essential benefits. Annual limits will be restricted and will be determined by The Department of Health and Human Services.

Rescission (cancellation of a health insurance contract by the carrier): No recessions are permitted, except in cases of fraud or intentional misrepresentation.

Coverage for children: Children will be allowed to stay on their parent’s health plans through the age of 26. Some carriers, like United Health Care and Aetna, have already begun the process to implement this change and are allowing members to add their children age 26 and younger back onto their current plans without waiting periods.

Pre-existing conditions: Plans will no longer be able to impose pre-existing condition exclusions for children under age 19.

Effective for new plans or plans renewed six months after the enactment date (does not include ‘grandfathered’ plans)-

Preventive services: New policies must cover the full cost of preventive care as recommended by the U.S. Preventive Services Task Force, recommended immunizations, preventive care for infants, children and adolescents and additional preventive care for women.

Appeals: New minimum requirements for internal and external claims appeals processes.

Patient protections: Plans that require or provide for a primary care provider (PCP) designation must allow each member to designate any in-network PCP, or Pediatrician for children, accepting new patients. Plans may no longer require an authorization or referral to an Ob-Gyn. Prior authorization or increased cost-sharing for emergency services is also prohibited.

Nondiscrimination rules: Nondiscrimination rules that apply to self-funded health plans are expanded to group fully insured health plans. Plans cannot base an employee’s eligibility or continued eligibility on hourly or annual salary.

In addition, there will be new employer reporting requirements in 2011 and new employer penalties and obligations starting in 2014. For more details, please click on the appropriate link below to be directed to our website where you can download informative high level overviews with time-lines created by Humana. Most of the information in this post was taken from these documents:

Small Group Employer High Level Overview and Timeline

Large Group Employer High Level Overview and Timeline

Or visit: http://healthreform.gov/

Under the American Recovery and Reinvestment Act of 2009 (ARRA), the federal government pays 65 percent of COBRA premiums for up to 9 months for Assistance Eligible Individuals (AEIs) who were involuntarily terminated between September 1, 2008, and December 31, 2009. An extension was signed into law by President Obama on Saturday, December 19, 2009 as part of the Department of Defense Appropriations Act of 2010 (H.R.3326). As a result:

AEIs can now receive the COBRA subsidy for 15 months instead of the 9 months under ARRA. This will be cumulative, meaning that any months which have already been subsidized will be part of and count toward the 15 months.

Eligibility of the subsidy will end on February 28, 2010 instead of December 31, 2009. This means that any COBRA-eligible individual that has been involuntarily terminated from their job before February 28, 2010 shall have the right to the subsidy.

This legislation also allows those AEIs who exhausted their full 9-month COBRA subsidy period prior to the date of enactment (i.e. December 19, 2009), and who failed to make a timely premium payment during the transition period, to reinstate coverage upon payment of all applicable premiums within 60 days of the date of the enactment or, if later, 30 days after notice is provided.

Employer Responsibility
Employers are required to provide notices describing the extension to anyone who was an AEI on or after October 31, 2009 and all individuals who have experienced a COBRA qualifying event of termination of employment (voluntary or involuntary) on or after October 31, 2009. The notice must be sent to these AEIs before February 17th, 2010.

Additional Guidance
The Department of Labor (DOL) has recently posted an Update COBRA General Notice (to be used for employees who qualify for COBRA continuation coverage and/or the subsidy going forward). They have also posted a Premium Assistance Extension Notice for employers use.

Click on the below link to download the notices:
http://www.dol.gov/ebsa/COBRAmodelnotice.html

Additional Resources on the COBRA Subsidy and the Extension:

DOL COBRA continuation coverage assistance under ARRA: 

http://www.dol.gov/ebsa/cobra.html

DOL model notices for the COBRA Subsidy Extension: 

http://www.dol.gov/ebsa/COBRAmodelnotice.html

FAQs on the COBRA Premium Reduction Extension Provisions:

http://www.dol.gov/ebsa/faqs/faq-cobra-premiumreductionEE.html

IRS Notice 2009-27:

http://www.irs.gov/pub/irs-drop/n-09-27.pdf