Category Policies

As the Affordable Care Act provides more and more clarification on the law, we are starting to see some serious mandates outside of what was known.

If you are receiving health insurance coverage through an ACA-compliant plan, you may be eligible for additional drug coverage that is not currently covered by your plan. The law stats that this drug coverage exception must be made by the carrier. This opens up a path to getting a drug covered that was not previously covered. Before this, if the plan did not cover a drug, it was difficult to get that drug covered at all.

We at Nefouse & Associates were able to get exceptions made in the past by going through the carrier and showing medical necessity. Now it appears that you will still have to show medical necessity, but now there is a path under the ACA.

Drug Exceptions Under the Affordable Care Act
It’s difficult to know whether you can get an exemption for a formulary drug under the ACA.

Exception Criteria

  1. Request for coverage of a drug that is not on the formulary list:For this exception, your medical provider would have to prove that all of the drugs on the formulary list are ineffective at treating your condition. There would have to be both clinical and scientific evidence that the condition could not be treated by the other covered medications, or that the other medications had adverse side effects.
  2. Dose limit/quantity limit:It would have to be proved that the maximum allowed dose or frequency has been ineffective in treating the condition. There is going to be a lot of checks and balances with toxicity risks and lab measurements.
  3. Step therapy for formulary drug:In this situation the plan would ask that you take a different drug first before approving the formulary drug. Your doctor would have to prove that the step therapy drug would cause an adverse reaction. Most common step therapy drugs are going to be antacids. I think the exception is more geared to cardiovascular drugs.
  4. Brand exclusion/generic requirements:In today’s fully-insured health insurance market, we are seeing more and more generic requirements, even if the brand drug is of medical necessity. This aspect of the law may steer the carriers away from forcing members to take only generic drugs or pay the difference.

This is only a snapshot of the exception rules. It would be a very long drawn out process to get some drugs approved. Your doctor has to be willing to work on your behalf by submitting all information that will make you eligible for the exception. In some cases, they are not only going to have to submit medical records showing medical necessity, but make a strong argument on your behalf. There is a lot more information on applying for an exception.

The approval process can take up to 1 year to get approved. You still want to have Nefouse & Associates in your foxhole if you need to go to war with a carrier. Contact Nefouse & Associates, or call us at (800) 846-8615.

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Self-Funded Plans

What is a self-funded plan? It’s where an employer provides health benefits to employees out of the company’s own pocket. We have seen the introduction of self-funded plans for small groups in Indianapolis. Small employers are looking for options to try to control rate increases caused by the Affordable Care Act. The self-funded option is worth entertaining, but a small-business owner should approach the concept with extreme caution.

A self-funded arrangement is a sophisticated approach to group health insurance. People will try to simplify the approach to get new clients, or to keep existing clients. Buyer beware!

Beware of the details in the contracting. A self-funded arrangement may have more than a hundred pages that you have to sign off on. It you are well-versed in insurance contract law, it should not be a problem. Most small-group employers are not well versed in self-funded arrangements. Most small-group brokers are also not well versed in this area.

So are you entering a contract that is adding additional liability? YES!

All about small group self-funded insurance plans for Indianapolis
It pays to study the self-funded insurance contract before you sign anything.

A Closer Look at the Self-Funded Plan Contract

Contract definitions you need to pay attention to:

  1. Aggregate stop loss: This is the total risk a employer will pay in one year in claims. It’s just like it sounds: stop the losses. It is extremely important that you understand the total risk you are taking on. If you are a small group, is it worth taking on the risk of $20,000 to save $2,000?
  2. Specific stop loss: This is the limit that you will pay for on one individual’s claims on your plan.
  3. Fixed costs: These are your administration costs for the third party to manage your self-funded plan. This will include your stop-loss insurance and broker compensation.
  4. Run-out claims: This refers to claims that were not filed prior to the plan year.
  5. Definition of a claim: Its extremely important that you know the definition of a claim in a self funded contract.

It Pays to be Informed

A self funded plan for a small company may be a good option. Take into consideration that it’s a complicated insurance vehicle. The broker may not be well-versed in the plan contract. The Sales rep for the insurance company may not be well versed in the plan structure. You, the owner, need to align yourself with a broker like Nefouse & Associates that understands self funding.

Contact Us

To talk to us anytime about self-funded plans, or any other aspect of healthcare plans locally, contact Nefouse & Associates, or call us at (800) 846-8615.

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Wellness Video

Above is a video that address some of the new changes for women’s preventive services covered under the new health care law.  In the past there has been coverage for these procedures but it was at a shared cost to the insured. Under PPAC these coverage are now covered at 100% with no cost to the insured as long as they stay in network.  For health insurance most providers are participating in the national networks like UHC and Anthem. Finding a network provider to perform these services should not be an problem, but it is always important to ask  the attending physician if they are participating in your network.  If  you are on a health plan that was established prior to 2010 you may want to check to see if these benefit are covered.


Women’s health

The following guidelines for women were effective for plan years beginning on or after Sept. 23, 2010:

  • Mammography screening (film and digital) for all adult women*
  • Genetic screening and evaluation for the BRCA breast cancer gene
  • Cervical cancer screening including Pap smears
  • Sexually transmitted diseases screening including gonorrhea, Chlamydia, syphilis and HIV
  • Iron-deficiency anemia, bacteriuria, hepatitis B virus and Rh incompatibility screening in pregnant women
  • Breast-feeding counseling and promotion
  • Osteoporosis screening (age 60 and older)*
  • Counseling women at high risk of breast cancer for chemoprevention

Expanded women’s preventive care services on or after Aug. 1, 2012

New coverage guidelines under the Patient Protection and Affordable Care Act (PPACA) require health plans to cover an expanded list of women’s preventive care services with no cost-share (copayment, coinsurance or deductible) as long as services are received in the health plan’s network. Coverage for the following expanded women’s preventive care services becomes effective the first plan year beginning on or after Aug. 1, 2012:

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My News

Reported a positive view of the Accountable Care Organization (ACO) The ACO is one of the main programs to reduce health care cost in the new health care law. This is really the 1st publication that states this type of approach to health care can be successful.  The Gov. is developing this platform for Medicare but there seems to be a huge investment by the health insurance industry in this model. The health insurance industry is suggesting this could save 40%.

If this approach works for Medicare then we will see it in the private insurance markets. This could have a huge impact on health insurance.

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The new Medical Loss Ratio will have a huge impact on health insurance companies. There is major concern in the industry that we could see some carriers pull of certain markets. The market that creates the most concern is the Individual market. This segment of insured represent a small portion of the overall block of business. Some companies will look at this block of business and ask themselves is it worth the risk.  In the individual market a company might make money on one policy but then lose 300%  on the next policy. In the past they have been able to pool the policies together to offset risk. This pooling is no longer an option for the carriers with the health care reform.
The Patient Protection and Affordable Care Act (or health care reform law) added a new provision to the Public Health Service Act that sets requirements for the minimum medical loss ratio. The medical loss ratio is the percentage of premiums that insurers spend on medical care (including claims and activities that improve health care quality), as opposed to the percentage spent on administrative expenses.Health insurance issuers offering insured group or individual coverage must meet the following minimums:

85% in the large group market

80% in the small group and individual market

Issuers who do not meet these minimums will be required to issue rebates.

The National Association of Insurance Commissioners (NAIC) was responsible for recommending to the U.S. Department of Health and Human Services which activities count as medical and quality improvement expenses, as well as how plans should calculate the medical loss ratio. The interim final regulations issued by Health and Human Services on November 22, 2010, adopted the NAIC’s model regulation in full but modified some of NAIC’s recommendations and added other provisions to the NAIC model.

Some key points from the interim final rules:

Medical loss ratio calculation would include premium used to pay medical claims and premium used for quality improvement activities. It would exclude federal and state taxes, and licensing and regulatory fees.

Issuers will need to report calendar-year premium, claims and other expenses for all insured group and individual health insurance coverage as an aggregate by legal entity state by state and by health insurance market (small group, large group, individual).

Reports must be submitted to Health and Human Services by June 1 of each year. Rebates must be paid by August 1 of each year.

The medical loss ratio provision does not apply to self-insured or ASO plans; it applies only to the issuer of insurance plans in the large and small group and individual markets.

Rebates will be provided to the enrollee (defined in the interim final rules as anyone covered by a group plan, as well as anyone covered by an individual policy, despite the fact that this term is not ordinarily used in the individual market).


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New Rule for Grandfathered Plans

Under the Patient Protection and Affordable Care Act (PPACA), health plans that existed on March 23, 2010 are generally considered “grandfathered plans.” Grandfathered plans are exempt from some of the health care reform requirements, including coverage of preventive care services with no cost-sharing and patient protections such as guaranteed access to OB-GYNs and pediatricians.

Regulations were issued on June 17, 2010 regarding grandfathered plans. These regulations provided that certain changes to an existing plan could cause the plan to lose its grandfathered status. For example, plans could lose grandfathered status by significantly increasing costs or reducing benefits under the plan. Under the initial rule, plans would also lose grandfathered status by changing insurance policies, even if no other prohibited changes were made to the plan.

The Departments of Labor, Health and Human Services and Treasury (the Departments) have now amended the grandfathered plan regulations to permit insured group health plans to change insurance policies or carriers.

Under the amended rule, group health plans will no longer automatically lose their grandfathered status merely because of a change in the plan’s insurance policy, certificate or contract of insurance. However, making any other prohibited change will still cause a loss of grandfathered status.

Reasons for the Amendment

The Departments stated the following reasons for reversing their position on this rule:

  •  The initial rule treated insured group health plans differently than self-funded group health plans. Insured group health plans were not able to change issuers or policies without  losing grandfathered status, while self-funded plans could change their third-party administrators (TPAs), as long as they did not make any other prohibited change. The amended rule allows all group health plans to keep their grandfathered status when changing insurance companies or TPAs.
  • A group health plan may not have a choice about changing its insurance issuer; for example, if the issuer withdraws from the market. Under the new rule, the plan sponsor can maintain grandfathered status if it has to contract with a new issuer.
  • The initial rule unnecessarily restricted the ability of issuers to reissue policies to current plan sponsors for administrative reasons not related to the underlying terms of the plan. Issuers can now transition policies to a subsidiary or consolidate policies without losing grandfathered plan status.
  • The initial rule potentially gave issuers undue and unfair leverage in negotiating the price of coverage renewals with grandfathered plan sponsors, which could interfere with competition and cost containment
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These Treatments will no longer have annual or life time limits

Alcoholism- Related Services
Ambulance Services
Asthma Education
Bariatric Surgery
Diagnostic Services
Durable Medical Equipment
Enteral Formula/Modified Low Protein Food Products
Infusion Therapy
Kidney Disease Treatment
Mental Health
Ostomy Supplies                             
Physician Office visit (Diagnostic Services)
Preventive Care Services
Prosthetic Devices/Limbs
Transplant  Services
Treatment of TMJ

Replace any annual or lifetime dollar limit with visit limit

Chiropractic Manipulation /Osteopathic manipulation services
Mental health/Substance Abuse In/Out Patient
Outpatient Occupational Therapy
Outpatient Physical Therapy
Outpatient Speech Therapy

Replace any annual or lifetime dollar limits with frequency limits
Hearing Aids

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As the health care reform becomes more and more clear we are starting to see the debate to repeal certain aspects. This recent legislation to repeal makes a lot of sense. The entire purpose of the Health Savings Accounts and Flexible Spending Accounts is to make consumers more engaged in their health care spending.  With these plans there is tax free dollars that can be used for the purchases of health care. One of the big issues is over the counter drugs (OTC). From a consumer standpoint if your acid reflux drug can be purchased OTC for $7 for a 90 day supply compared with a brand name drug that is $89 for 30 days supply that is a huge cost savings. If the OTC treats the conditions effectively and your Doctor agree it just makes sense. With the HSA and FSP account you can use pre tax money to buy the OTC drug thus creating consumerism. The new health care law take away the tax incentives of using your money for OTC drugs.

Senator Kay Bailey Hutchison’s (R-TX) recently-introduced Patients’ Freedom to Choose Act, legislation that repeals two provisions included in the Patient Protection and Affordable Care Act.

Under current law, starting in 2011, the PPACA will prohibit individuals from using either their Health Savings Account (HSA) or Flexible Spending Account (FSA) funds to purchase over-the-counter medication unless they have a prescription from their doctor. And, starting in 2013, the PPACA institutes an annual FSA contribution cap of $2,500.

The Patients’ Freedom to Choose Act strikes these arbitrary provisions from the law. Many individuals and employers will benefit from this important legislation. Over 80% of all large employers that offer an FSA to their employees include a limit that is over this $2,500 threshold. According to a report issued by America’s Health Insurance Plan, over ten million Americans are insured with an HSA-compatible plan.

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With the health care reform we are now going to see plans required to cover preventive care. It should be very interesting to see what kind of impact these coverages have on premium. There is no doubt that these additional coverage will increase premium. The problem right now is no one knows what kind of premium increase these coverages are going to have. From a long term standpoint if everyone takes advantage of these first dollar benefits will it reduce costs? If someone can catch a health problem early then the treatment can be much more effective which could reduce larger treatments down the road. In the short period we all pay more in premium.

“If you have a new health insurance plan or insurance policy beginning on or after September 23, 2010, the following preventive services must be covered without your having to pay a copayment or coinsurance or meet your deductible, when these services are delivered by a network provider.”

Covered Preventive Services for Adults

Abdominal Aortic Aneurysm one-time screening for men of specified ages who have ever smoked
Alcohol Misuse screening and counseling
Aspirin use for men and women of certain ages
Blood Pressure screening for all adults
Cholesterol screening for adults of certain ages or at higher risk
Colorectal Cancer screening for adults over 50
Depression screening for adults
Type 2 Diabetes screening for adults with high blood pressure
Diet counseling for adults at higher risk for chronic disease
HIV screening for all adults at higher risk
Immunization vaccines for adults–doses, recommended ages, and recommended populations vary:
Hepatitis A
Hepatitis B
Herpes Zoster
Human Papillomavirus
Measles, Mumps, Rubella
Tetanus, Diphtheria, Pertussis
Obesity screening and counseling for all adults
Sexually Transmitted Infection (STI) prevention counseling for adults at higher risk
Tobacco Use screening for all adults and cessation interventions for tobacco users
Syphilis screening for all adults at higher risk

Covered Preventive Services for Women, Including Pregnant Women

Anemia screening on a routine basis for pregnant women
Bacteriuria urinary tract or other infection screening for pregnant women
BRCA counseling about genetic testing for women at higher risk
Breast Cancer Mammography screenings every 1 to 2 years for women over 40
Breast Cancer Chemoprevention counseling for women at higher risk
Breast Feeding interventions to support and promote breast feeding
Cervical Cancer screening for sexually active women
Chlamydia Infection screening for younger women and other women at higher risk
Folic Acid supplements for women who may become pregnant
Gonorrhea screening for all women at higher risk
Hepatitis B screening for pregnant women at their first prenatal visit
Osteoporosis screening for women over age 60 depending on risk factors
Rh Incompatibility screening for all pregnant women and follow-up testing for women at higher risk
Tobacco Use screening and interventions for all women, and expanded counseling for pregnant tobacco users
Syphilis screening for all pregnant women or other women at increased risk

Covered Preventive Services for Children

Alcohol and Drug Use assessments for adolescents
Autism screening for children at 18 and 24 months
Behavioral assessments for children of all ages
Cervical Dysplasia screening for sexually active females
Congenital Hypothyroidism screening for newborns
Developmental screening for children under age 3, and surveillance throughout childhood
Dyslipidemia screening for children at higher risk of lipid disorders
Fluoride Chemoprevention supplements for children without fluoride in their water source
Gonorrhea preventive medication for the eyes of all newborns
Hearing screening for all newborns
Height, Weight and Body Mass Index measurements for children
Hematocrit or Hemoglobin screening for children
Hemoglobinopathies or sickle cell screening for newborns
HIV screening for adolescents at higher risk
Immunization vaccines for children from birth to age 18 —doses, recommended ages, and recommended populations vary:
Diphtheria, Tetanus, Pertussis
Haemophilus influenzae type b
Hepatitis A
Hepatitis B
Human Papillomavirus
Inactivated Poliovirus
Measles, Mumps, Rubella
Iron supplements for children ages 6 to 12 months at risk for anemia
Lead screening for children at risk of exposure
Medical History for all children throughout development
Obesity screening and counseling
Oral Health risk assessment for young children
Phenylketonuria (PKU) screening for this genetic disorder in newborns
Sexually Transmitted Infection (STI) prevention counseling for adolescents at higher risk
Tuberculin testing for children at higher risk of tuberculosis
Vision screening for all children

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This is the clearest explanation that I could find on the health care tax credit. This information was put together by 15 attorneys that specialize in interpreting these types of laws. This is very complicated. What was spun as a simple tax credit is very difficult to qualify and understand.  A small business might end up spending more on professional services to get the credit than what the tax credit is worth.


Who is Eligible for the Credit? To be eligible for the Credit, an employer must be an “eligible small employer” for the year – requiring all 4 criteria to be satisfied:

1. taxable employer or a 501(c) tax-exempt employer (e.g., colleges and universities);

2. fewer than 25 full-time equivalent employees (“FTE”) for the taxable year;

  • • FTE: In order to determine the number of FTEs, the employer must divide the total “hours of service” (but not more than 2,080 hours for an employee) of the”employees” by 2,080, and round down to the next lowest whole number.
  • • Employees: For this purpose, count employees who perform services for the employer (which is a controlled group concept), excluding (1) partners, soleproprietors, 2% S-corp. owner, and 5% owners (along with any family members),and (2) seasonal employees unless they work more than 120 days during the taxable year (but always count these premiums).
  • • Hours of Service: Hours include (1) each hour for which an employee is paid, orentitled to pay, for work performed; and (2) each hour for which an employee is paid, or entitled to pay, for periods the employee did not perform work due to a vacation, holiday, illness, incapacity disability, layoff, jury duty, military duty or leave of absence (maximum 160 hours for a single continuous period). This calculation may be a challenge depending on your pay types and payroll records;therefore, the IRS permits using either an 8 hours/day or 40 hours/week equivalency (which should be considered if it lowers the hours). We recommend reviewing the available options with your payroll department.

3. “average annual wages” for FTEs must be less than $50,000; and

  • • Average Annual Wages: The employer divides the total Medicare wages paid by the employer for the “hours of service” during the taxable year by the number o FTEs, rounded down to the nearest $1,000. Unfortunately, this may not simply line up with box 5 of the W-2 because this is only wages attributable to “hours of service.”

4. employer pays “health insurance coverage” through a “qualifying arrangement.”

  • • Heath Insurance Coverage: The Notice provides an expansive list of medical care coverage (whether insured or self-funded, which should include HRAsand HSAs), including HMO/PPO, dental, vision, long-term care, nursing home care, specified disease or illness, hospital indemnity, and Medicaresupplemental. The list excludes, among others, accident or disability insurance and worker’s compensation insurance. Importantly, the credit only covers employer paid premiums and does not include employee pre-tax or post-tax payments (e.g., section 125 payments are not eligible). Also, in general, State tax credits or premium subsidies are counted as employer paidpremiums and will not negatively affect the amount of the Credit.

• Qualifying Arrangement: The employer pays a uniform percentage of not less than 50% of the premium cost for the coverage. (Each type of coverage is tested separately for this purpose.) For 2010, the employer only needs to pay an amount equal to at least 50% of the premium for single (employee-only) coverage for each enrolled employee, and all premiums paid in 2010 will count (even if paid prior to the March 23, 2010 enactment date).

What is the Amount of the Credit? The maximum Credit is currently 35% of the employer paid “health insurance coverage” premiums (25% for tax-exempt employers). The maximum Credit is increased to 50% beginning in 2014 but will only be available if the coverage ispurchased through the Exchange. Importantly, the Credit is phased out rather quickly if the employer has more than 10 FTEs or the “average annual wage” exceeds $25,000. The following steps can be taken to calculate the 2010 Credit:

Step 1: Determine that you meet the definition of “eligible small employer” for the year.

Step 2: Determine the employer portion of the premium paid for the year for each “employee” (which includes any State subsidy).

Step 3: Take the lesser of Step 2 amount or the employer’s percentage of average small group market rates set forth in Revenue Ruling 2010-13 (by State) for each “employee” and sum this amount.

Step 4: Multiple Step 3 amount by 35% (25% for a tax-exempt employer).

Step 5: For a tax-exempt employer, enter the smaller of Step 4 amount or the aggregate federal income tax withholding and employer and employee share of Medicare taxes paid/withheld for the year (which will likely require a review of Form 944 and again help from your payroll department). For a taxable employer, enter the amount from Step 4.

Step 6: Reduce Step 5 amount by the sum of: (1) if more than 10 FTEs: (FTE – 10)/15 x Step 5, and (2) if “average annual wages” exceeds $25,000: (“average annual wages” – $25,000)/$25,000 x Step 5. (If negative, then the Credit is zero and stop here.)

Step 7: Reduce Step 6 amount to not exceed the employer’s net premium payments if State credits or subsidies for health insurance are available to the employer (e.g., amount actually paid by the employer excluding the State subsidy).

How is the Credit Claimed? For taxable employers, the Credit is claimed on the employer’s annual income tax return (e.g., Form 1120 and presumably Form 3800) a nonrefundablegeneral business tax credit (which can be carried forward 20 years and may offset AMT). Note that a deduction for the health care costs is not permitted for the amount of the Credit, which should be considered when determining the value of the Credit. For tax-exempt employers, the IRS is still working on how to receive the refundable credit (e.g., likely Form 990-T to offset unrelated business income tax or result in a refund, but for small employersthat may rarely file Form 990-T, a new schedule to Form 990/990-EZ would be preferred). When valuing the Credit for these employers, the loss of the deduction is not a factor but theCredit is limited to the annual employment taxes (federal income tax withholding andemployer and employee share of Medicare tax), which may impact the value of the Credit. Importantly, for all employers, the Credit has no impact on employment tax forms/deposits(e.g., no impact on Form 944 or related deposits), which is a which is a helpful clarification.

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