Category Policies

With the passage of the Patient Protection and Affordable Care Act (“PPACA”) and the Health Care and Education Reconciliation Act of 2010, Americans face a new era in health insurance. While there is still much guidance to come from the government,

Major changes to the limited medical industry are coming this Fall. Limited medical plans will be subject to new rules. Policy holders should contact the carrier ask them how the new laws will affect their plans.

Employers utilizing limited medical plans are facing many changes, beginning as soon as September 24, 2010 when grandfathered health insurance plans begin to renew. Group health plans, even those which have been grandfathered, will have to meet new requirements, including no lifetime and annual limits, on or after September 2010. All limited medical plans that were considered “group health insurance plans;” plans that issued Letters of Creditable Coverage under HIPAA; plans identified as Limited Major Medical Plans that function similarly to traditional group plans with co-pays, deductibles, co-insurance and an annual overall maximum or a separate inpatient/outpatient maximum; will be subject to these new regulations.

Within the limited medical industry, there are two styles of limited medical benefit plans: coinsurance and indemnity-based insurance. Fixed indemnity style limited medical plans that do not issue creditable coverage letters or represent themselves as a “true group health insurance plan” are exempt from the new regulations because they are filed as supplemental and not subject to these new regulations, as opposed to the coinsurance-based limited medical plans, which are.

Employer groups renewing after September 23, 2010 that are currently on a limited medical plan subject to the health care reform rules regarding the removal of annual and lifetime limits have several options:

1) Their carrier will not renew the plan because it cannot meet the new rules;

2) They are renewed with significant rate increases; or

3) They move to a fixed indemnity style limited medical plan

If you are a policy holder of one of these types of plans it’s important to contact the carrier for more information.

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This is going to be very interesting to see how the grandfathered plans are treated from a carrier standpoint. It’s very possible that these plans could cost less than the new generation of plans that will be launched under the health care reform.

The next few years these grandfathered plans either group or individual could become very valuable. If you have a plan where the premium is 35% lower than market condition you will not want to let that plan go.

 

What is a “grandfathered” health plan?

A “grandfathered” health plan is any group health plan or individual coverage that was in effect on the date of the Acts’ enactment on March 23, 2010. “Grandfathered” status is important under the Acts as certain provisions of the Acts do not apply to grandfathered plans (or at least to many participants under “grandfathered” plans), or apply to such plans at a later date. There remain many questions regarding “grandfathered” plans and the extent to which “grandfathered” status will apply

What provisions of the Acts apply to “grandfathered” health plans
 
The following lists some of the key provisions of the Acts that apply to “grandfathered” health plans with plan years beginning on or after September 23, 2010:

  • Dependent Coverage Until Age 26 – The Acts require group health plans (including “grandfathered” health plans) that cover dependents to provide coverage for dependent children until they reach age 26, regardless of student status or marital status. However, for plan years beginning before January 1, 2014, coverage need not be offered by a “grandfathered” plan if a dependent is eligible to enroll for coverage under another employer-sponsored group health plan.
  • Restrictions on Annual and Lifetime Limits – Group health plans (including “grandfathered” health plans) may not impose lifetime limits or “unreasonable” annual limits on the value of “essential benefits” for any plan participant or beneficiary. 
  • Prohibition on Retroactive Cancellation of Coverage – Group health plans (including “grandfathered” health plans) may not retroactively cancel a participant’s coverage once the participant is enrolled in the plan unless the individual has engaged in fraud or made an intentional misrepresentation of a material fact. 
  • Restrictions on Preexisting Conditions – The Acts mandate that group health plans (including “grandfathered” health plans) may not impose any preexisting condition exclusions for eligible children under age 19.

 

 

It is very possible if these are the only acts that are imposed on the grandfathered health plans they very well might end up costing much less.

 

What provisions of the Acts do not apply to “grandfathered” health plans?

“Grandfathered” health plans are excluded from the following provisions of the Acts so long as the plan maintains its “grandfathered” status:

  • Preventative Care Benefits – For plan years beginning on or after September 23, 2010, the Acts require that group health plans (other than “grandfathered”  health plans) offer certain preventative care benefits, such as immunizations and breast cancer screening, on a first-dollar basis, without cost to participants.
  • Nondiscrimination Testing – Currently, the existing Internal Revenue Code rules for nondiscrimination testing apply only to self-insured plans. For plan years beginning on or after September 23, 2010, the Acts require that fully-insured health plans (other than “grandfathered” health plans) apply the same nondiscrimination tests in an effort to discourage plans that cover only high-ranking employees.
  • External Review of Claim Denials and Appeals – For plan years beginning on or after September 23, 2010, group health plans (other than “grandfathered” health plans) must provide a mechanism in their claims procedures for an external review process, among other things.

Since these acts do not apply these plans should cost the carriers less in claims which means less in premium for the policy owner.

Time will tell.

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Group Gap Policy for Major Medical plan

 Group Gap Policies can help to offset health insurance premiums. Instead of complete cost shifting a high deductive the employer can pay for a gap policy that will pay a portion of the insured’s deductible.

 Typical Plan Overview and Benefits

Gap policies have been specifically designed to pay an indemnity benefit for out-of-pocket expenses of deductibles, co-insurance and co-payments from serious illnesses charges by the insured group’s comprehensive medical plan.

In-Hospital Indemnity Benefit

This benefit helps pay the deductibles, coinsurance or co-payment for:

Inpatient Hospital stays

Inpatient surgeries

Physician’s in-hospital charges

Routine nursery care for dependent children

Outpatient Hospital Indemnity Benefit

This benefit helps pay the deductibles, coinsurance or co-payment for:

Surgery in a hospital outpatient facility or a free-standing outpatient surgery center.

 Diagnostic testing in a hospital outpatient facility or MRI facility..

Treatment in a hospital emergency room  

Ambulance Indemnity Benefit

These benefit usually help pay for the deductibles, coinsurance or co-payment for ambulance transportation to a hospital or emergency center for injuries sustained in an accident.

Things to Consider

Some Gap Policies are not H.S.A compliant

Benefits are paid directly to the provider after an EOB has been submitted to the carrier

Gap policy may qualify for Cobra

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While President Barack Obama continues to shape and mold his healthcare reform policies, said to be the most controversial in decades, it is not met without resistance from both sides of the isle. Obama’s plan would attempt to make health care universal while still allowing the use of private healthcare services. Read the full article at Reuters.
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