Author Anthony Nefouse

The excise tax was included in the Patient Protection and Affordable Care Act (PPACA) passed into law on March 23, 2010. The provision levies a 40% nondeductible tax on the annual value of health plan costs for employees that exceed $10,200 for single coverage or $27,500 for family coverage in 2018. Data reveals that the average 2010 cost of medical coverage for active single and family plans is $5,184 and $14,988, respectively. When these figures are projected out to 2018 with reasonable estimates of future health care inflation, the excise tax is often triggered.

As a result of the excise tax provision, a plan with single coverage costs of $11,200 in 2018 would exceed the limit by $1,000 and be assessed a tax of $400. If 10,000 employees were enrolled in that plan, the total tax bill would be $4,000,000. The tax is paid by the employer either through increased premiums on an insured plan or a surcharge levied by the administrator of a self-funded health plan. Employers will be forced to either absorb the additional tax or pass some, or all, of it back to employees in the form of higher premiums.

Health care reform’s so-called “Cadillac plan” excise tax will affect more than 60% of large employers’ active health plans by the provision’s 2018 effective date.

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New study show a large increase of Health Savings Account plans. These type of major medical plans are becoming popular because they create a reduction in premium. Consumers are starting to look at health insurance for major medical events and then small claims fall on to them. When the consumer now pays the first $2,500 in claims in a plan year they are more likely to shop out a minor procedure. If one needs an MRI on your knee its amazing to see the different charges for the same procedure. It very common to a $2,000 difference in price from the cheapest to the highest charge.  Looking at the HSA in another  way is you have your deductible to meet and that is it. So you know as a policy holder your worst case scenario in claims in one year is your deductible. Consumers have an easier time budgeting for just the deductible. The last reason we are seeing a large increase in HSA plans is the tax benefit side. Now all of your medical expense are tax deductible. So if you fund you HSA custodial account you can write off your contributions.Ten million Americans are covered by Health Savings Account (HSA)-eligible insurance plans, an increase of 25 percent since last year, a new census released today by America’s Health Insurance Plans (AHIP) finds.  Health Savings Accounts were authorized starting in January 2004.  Since then, AHIP has conducted a periodic census of health plans participating in the HSA/high-deductible health plan (HDHP) market.“HSA plans continue to be an important coverage option for families and small businesses across the country,” said Karen Ignagni, President and CEO of AHIP.

Key findings from the census include:

•           As of January 2010, approximately 10 million people were covered by HSA/HDHP products, an increase of 25 percent since last year.

•           Between January 2009 and January 2010, the fastest growing market for HSA/HDHP products was large-group coverage, which rose by 33 percent, followed by small-group coverage, which grew by 22 percent.

•           Thirty percent of individuals covered by an HSA plan were in the small group market, 50 percent of individuals covered by an HSA plan were in the large-group market, and the remaining 20 percent were in the individual market.

•           In the individual market, 2.1 million covered lives are enrolled in HSA plans, while nearly 3 million lives were enrolled in HSA/HDHP coverage in the small-group market and almost 5 million lives were covered in the large-group market.

•           States with the highest levels of HSA/HDHP enrollment were California (1,018,000), Ohio (651,000), Florida (639,000), Texas (637,000), Illinois (575,000), and Minnesota (361,000).

For more information about the 2010 HSA/HDHP census, please visit www.AHIPResearch.org.

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The Medical Loss Ratio is very critical to the health insurance industry. This MLR is going to have a huge effect on carriers profits and how they operate. In fact we could see some carriers drop out of certain markets reducing the already limited choices of carriers. The HHS has to clarify the laws on  the MLR. These laws going into effect as of Jan1st 2010 so we are getting down to the wire on explantions.

The National Association of Insurance and Financial Advisors (NAIFA) has again partnered with The Council of Insurance Agents & Brokers (CIAB), the Independent Insurance Agents & Brokers of America (IIABA), and the National Association of Health Underwriters to provide comments to the Department of Health and Human Services regarding the development of Medical Loss Ratios (MLRs) in section 2718 of the Public Health Service Act.

The groups are concerned that the narrow MLR definitions would adversely impact spending on such important health plan activities as case management, wellness, disease management, and fraud and abuse prevention programs, among others.

The group asserts, “It is important to spend time clearly defining clinical series and administrative costs to allow insurance carriers to provide an array of services that will improve the health of Americans and provide them the health care they deserve – effectively and efficiently – including the important services provided by licensed health insurance agents, brokers, and benefits consultants.”

Read the group’s full comment letter on the development of Medical Loss Ratios at www.naifa.org/advocacy/documents/05172010_2718.pdf.

About NAIFA: The National Association of Insurance and Financial Advisors comprises more than 700 state and local associations representing the interests of approximately 200,000 agents and their associates nationwide. NAIFA members focus their practices on one or more of the following: life insurance and annuities, health insurance and employee benefits, multiline, and financial advising and investments. The Association’s mission is to advocate for a positive legislative and regulatory environment, enhance business and professional skills, and promote the ethical conduct of its members

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Insurance Affects ICU Survival Rate In U.S.: Study
Intensive care patients who did not have health insurance were 21 percent more likely to die than insured patients, U.S. researchers reported on Monday.Their study of intensive care units or ICUs in Pennsylvania adds to arguments that a lack of health insurance can be deadly. Health insurance reform legislation signed into law last March aims to sharply reduce the numbers of Americans — currently around 15 percent of the population — who do not have health insurance.

“Our findings suggest that ICU patients without insurance have a higher risk of death and receive less intense treatment in the ICU,” Dr. Sarah Lyon of the University of Pennsylvania, who led the study, said in a statement.

“Expanding and standardizing health care coverage through health care reform may improve outcomes in critically ill patients,” she added.

Her team looked at data from all 166,995 adult patients under age 65 admitted to Pennsylvania ICUs from 2005 to 2006.

About two-thirds had private insurance, 28 percent had Medicaid, the state-federal health insurance plan for the poor, and 3.8 percent had no insurance.

The uninsured patients were 21 percent more likely to die within 30 days than patients with private insurance, the researchers told a meeting in New Orleans of the American Thoracic Society.

“We still do not understand all the reasons for differences in survival between the insured and uninsured,” Lyon said.

“Critically ill patients without insurance may arrive to the hospital in more advanced stages of illness, perhaps in ways we could not control for in our study. Patients without insurance may also have different preferences for intensity of care at the end of life, and may not wish to be kept alive on life support as long as patients with insurance.”

But there could be another reason, she said.

“Another, more concerning explanation is that physicians and hospitals treat patients without insurance differently than those with insurance. More work is needed before we can say with certainty that treatment biases caused these results.”

The uninsured patients did not go to poorer-quality hospitals, she said. The disparities persisted across even the same hospitals.

About 46.3 million people in the United States lacked coverage in 2008, the U.S. Census Bureau reports, up from 45.7 million in 2007. About 30 to 32 million people are expected to gain health insurance under the new legislation.

In September, Harvard Medical School researchers reported that nearly 45,000 people die in the United States each year because they lack health insurance.

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Under the new health care reform laws each state has the option of setting up a high risk pool insurance plan. The state of Indianapolis has declined to participate in this high risk pool. Currently we have a high risk pool called Indianapolis ComprehensiveHealth that will contiune to operate seperatly from additional high risk pools.

The state of Indianapolis decided that the federal Gov can set up the High Risk Pool. There are many reason for this but the one that jumps out is cost. Under the Health care Act there has been $5 billion dollars allocated to these high risk pools. This is to fund the plans until the health insurance excahnges go into effect. Its not nearly enough money. Currently in our country we have about 200,000 people on some type of high risk pool insurance. These plans are running $2 billion a year. That $5 billion will be gone in the first year because there will be more than 200,000 on those plans. Then each state will have to fund these plans.  Where will they get the money?

Along with the fuzzy math from the Federal Gov comes along some rules with the high risk plans that makes no sense. First aspect is the premium rate. It is stated that the premium for these plans have to be the same as a standard plan. The problem here is a lot of people will switch the high risk pool because it will be much cheaper than what they are currently paying. Then funding the plan because a huge problem because the premiums are too low. The second major problem is to be eligible for the high risk pool plan you have to be uninsured for 6 months. So all of the capable/responsible people that have been paying high premiums on current high risk pools will not eligible.

These Federal High Risk Pools are going to be a mess.

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The Early Retiree Reinsurance Program helps employers provide coverage to retirees

The recently passed Patient Protection and Affordable Care Act includes an early retiree reinsurance program available to groups that provide medical coverage to early retirees and their spouses, surviving spouses and dependents. This temporary program will provide $5 billion to help employers to continue to provide coverage to retirees ages 55 to 64.

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.

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 and federal subsidies for coverage.

Both self-insured and fully insured employer groups that offer early retiree coverage can apply, including plans sponsored by private entities, state and local governments, nonprofits, religious entities, unions, and other employers. To participate in the program, employers must first submit applications to the Department of Health and Human Services, which is expected to make the application available in the coming weeks. We’ll share a link to the application when it becomes available.

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New Cost Estimate Tops $1 Trillion: U.S. Health and Human Services Secretary Kathleen Sebelius issued a letter to congressional leaders this week, touting the administration’s early success in implementing certain provisions of health care reform. Meanwhile, officials from the Congressional Budget Office (CBO) reported on Tuesday that the health care reform legislation will cost about $115 billion more in discretionary spending over the next 10 years than the original cost projections. The CBO representative pointed out that if lawmakers approve this additional spending, the total cost of the health care reform law will exceed $1 trillion over the next 10 years. A Republican spokeswoman for the House Appropriations Committee responded saying, “If Congress were to approve all of this new discretionary funding authorized in the health care bill, almost all of the administration’s highly touted savings would be made null and void.”

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The Mental Health Parity and Addiction Equity Act (MHP) is one of several federal health care reform laws that are creating a significant and immediate impact on employers. The new legislation prohibits group health plans that provide mental health and/or substance use disorder benefits from applying ”

Regulations issued by the federal government

on February 2, 2010, interpret and provide additional guidance on MHP and may result in changes to your health plans. The guidance issued, considered as “interim final rules,” suggests that MHP may result in additional regulations and legislative direction still to come. We will continue to provide you updates as additional information is available. financial requirements” or “treatment limits” that are more restrictive than the “predominant” financial requirement or treatment limit that applies to “substantially all” medical/surgical benefits. We are working to ensure the health plans we offer fully comply with the provisions contained in MHP.

Mental Health Parity Basics

Whom does MHP apply to?

MHP applies to all employer groups with more than 50 total employees. This includes all fully insured and self-funded employer plans, governmental plans, union plans and church plans. Self-funded governmental plans may opt out and should contact their legal counsel if they are interested in investigating this further.

When does MHP take effect?

The new regulations apply to group plan years beginning on or after July 1, 2010. As you may remember from our earlier communications of the statute, we do not track a group’s plan year. Accordingly, we will use the group’s renewal date as the effective date for a group unless we are told otherwise. Employers who renew between November 2009 and June 2010 comply with the regulations based on the original interpretation of the law but may need to make additional changes at their next renewal (or plan year).

What is required for compliance?

MHP specifically requires the following to be in parity between medical and mental health and/or substance abuse disorder services: deductibles, copayments, coinsurance, out-of-pocket expenses and limits on frequency of treatment, number of visits and number of days of coverage.

Key Changes

Benefit Design and Parity Testing

To ensure financial parity between mental health and/or substance abuse disorder, and medical and surgical benefits, we are currently evaluating plan designs using prescribed formulas. Plans are evaluated under a “substantially all” and “predominant” three-step evaluation to determine the availability and level of cost sharing (types of cost sharing include copays, coinsurance, or deductibles).

Step 1

: Benefits are classified into one of six benefit categories: inpatient, in network; inpatient out of network; outpatient in network; outpatient, out of network; emergency care and prescription drugs.

Step 2:

Within each benefit category as specified in Step 1, a two-thirds (“substantially all”) rule is applied for each type of cost share feature employed:

A cost share feature can be applied to mental health and/or substance abuse disorder services

if it applies to at least two-thirds of all medical benefits within that benefit category.

A cost share feature cannot be applied to mental health and/or substance abuse disorder services

if it does not apply to at least two-thirds of all medical benefits. : The evaluation criteria for the tiering of prescription drug benefits differs and is based on reasonableness factors including cost, efficacy, generic versus brand name, and mail order versus pharmacy pick-up. Our current pharmacy practices comply with the new regulations.

Step 3

Following evaluation of our standard plans using the above methodology we can offer the following guidance:

All HSA/HRA plans comply and will not require plan changes.

Non-HSA/HRA plans will likely be modified, and will include features such as 100% coverage of outpatient mental health and/or substance abuse disorder services.

The outpatient benefit category will be impacted most by the rules.

Non-standard plans will be evaluated during the renewal process. Please contact your broker or sales representative for additional information.

: If cost sharing can be applied, the cost sharing amount is determined using the 50% (“predominate”) rule. The cost share is the amount that applies to more than half of the benefits in that category.

Administration of mental health and/or substance abuse disorder benefits through a third-party vendor

Definition of Mental Health and Substance Abuse Conditions

Under the regulations, whether a condition is considered a mental health and/or substance abuse disorder condition is to be determined “consistent with generally recognized independent standards of current medical practice.” Examples of such standards in the regulations include the Diagnostic & Statistic Manual of Mental Disorders, the International Classification of Diseases, and state guidelines. (Note: Standards listed as examples may include conditions not covered by a plan.) Our review indicates no changes are needed due to this provision.

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President Barack Obama’s new health care law could potentially add at least $115 billion more to government health care spending over the next 10 years, congressional budget referees said Tuesday.

If Congress approves all the additional spending called for in the legislation, it would push the ten-year cost of the overhaul above $1 trillion.

 The Congressional Budget Office said the added spending includes $10 billion to $20 billion in administrative costs to federal agencies carrying out the law, as well as $34 billion for community health centers and $39 billion for Indian health care.

The costs were not reflected in earlier estimates by the budget office, although Republican lawmakers strenuously argued that they should have been. Part of the reason is technical: the additional spending is not mandatory, leaving Congress with discretion to provide the funds in follow-on legislation — or not.

Congressional estimators also said they simply had not had enough time to run the numbers. Costs could go higher, because the legislation authorizes several programs without setting specific funding levels.

The health care law provides coverage to some more than 30 million now uninsured, offering tax credits to help purchase health insurance through new competitive markets that open for business in 2014. When Congress passed the bill in March, the CBO estimated the coverage expansion would cost $938 billion over 10 years, while reducing the federal deficit by $143 billion.

“If Congress were to approve all of this new discretionary funding authorized in the health care bill, almost all of the administration’s highly touted savings would be made null and void,” said Jennifer Hing, spokeswoman for Republicans on the House Appropriations Committee.

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Recently we have had a handful of national carriers all agree to carry existing dependents through age 26. If the dependent is eligible for the plan you will have to wait until open enrollment. Remember to look at possible individual coverage as it may be significantly cheaper.

To clarify, we will automatically extend coverage for currently enrolled dependents through age 26 as a standard benefit for all existing ASO and fully insured business as of June 1, 2010. This extension of coverage only applies to currently enrolled dependents. Groups may not add new dependents who have previously aged off or who are already beyond the current eligibility age in place for the group

When groups renew or are effective on or after October, their dependent eligibility will automatically change to age 26. This will allow them to enroll dependents up to age 26 during open enrollment.

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