Annual Limit Waiver

The Patient Protection and Affordable Care Act (PPACA) restricts the use of annual dollar limits on essential health benefits.  The interim final rules for this provision indicate that plans can apply for a waiver if compliance with the provision would significantly decrease access to benefits or significantly increase premiums.  The U.S. Department of Health and Human Services (HHS) has issued a memo providing more details about the waiver.  Here’s what you need to know.

To whom the annual limits provision applies:

The provision applies to grandfathered and non-grandfathered group plans, as well as non-grandfathered individual (or consumer) plans.  It does not apply to grandfathered individual plans.

Key points from the interim final rules and HHS memo:

The interim final rules state that annual dollar limits on essential health benefits are not permitted for plan or policy years beginning on or after January 1, 2014.  Until that time, annual dollar limits on essential health benefits cannot be lower than:

• $750,000 for plan years beginning September 23, 2010 to September 23, 2011
• $1.25 million for plan years beginning September 23, 2011, to September 23, 2012
• $2 million for plan years beginning September 23, 2012, to January 1, 2014

The HHS memo about the waiver program addresses these key points:

• Plans must request and receive approval for a waiver annually.
• A waiver is available only if the plan had an annual limit before September 23, 2010.
• No waivers will be granted for plan years that start on or after January 1, 2014.
• The waiver applies only to the annual plan-level limit, not the lifetime plan limit or to any benefit-specific limits.
• Depending on the group’s funding, either the group or the plan issuer can request a waiver.
• The waiver request must include:
  • A plan description, including the annual limit
  • Enrollment in plan
  • Rates for plan
  • Impact to rates/access that would result if annual limit was removed/modified to comply with the provision requirements
  • Attestation that the plan and plan limit was in place before September 23, 2010, and that there would be a significant decrease in access or increase in premium without the waiver

Limited benefit plans, also known as “mini med” plans, often have annual limits well below the restricted annual limits set out in the interim final regulations.

 

Questions and Answers

Is there a deadline to apply for a waiver?

Yes, according to the HHS memo, the plan or issuer must apply by the following date:

• For plan years that start before November 2, 2010 – At least 10 days before the plan year starts
• For plan years that start after November 2, 2010 – At least 30 days before the plan year starts

How long will it take for HHS to process waiver requests?

HHS will process complete waiver applications within the following time frame:

• For plan years that start before November 2, 2010 – No later than five days before the plan year starts
• For plan years that start after November 2, 2010 – Within 30 days of receipt

Is there a specific form that groups need to fill out to request a waiver?

No.  The HHS memo lists the information the plan or issuer needs to submit (see below), but it doesn’t specify a particular form for the request.

What information doe groups need to submit to request a waiver?

The HHS memo states that all of these items are required:

• The terms of the plan or policy form(s) for which a waiver is sought;
• The number of individuals covered by the plan or policy form(s) submitted;
• The annual limit(s) and rates applicable to the plan or policy form(s) submitted;
• A brief description of why compliance with the interim final regulations would significantly decrease access to benefits for those currently covered by such plans or policies, or significantly increase premiums paid by those covered by such plans or policies, along with any supporting documentation; and
• An attestation, signed by the plan administrator or chief executive officer of the issuer of the coverage, certifying that 1) the plan was in force before September 23, 2010; and 2) the application of restricted annual limits to such plans or policies would significantly decrease access to benefits for those currently covered by such plans or policies, or significantly increase premiums paid by those covered by such plans or policies.

What is the process for clients who want to apply for a waiver?

Clients who want to apply for a waiver should contact their sales or account management representative.

The sales or account management representative will provide these items to the client:

• Data to help the group determine the impact of increasing or removing the annual limit – for example, a rate quote with the limit removed or claims data that the group’s consultant can use for claims projections.
• The plan description and enrollment information if the client requests it.

The client will need to provide two items to the sales or account management representative:

• Documentation that it has applied for the waiver.
• Proof that the group has received the waiver (this must be received before the renewal effective date). 

This process will need to take place before every plan year for which the client is applying for a waiver.

Can groups apply for a waiver for lifetime maximums?

No, the waiver only applies for annual plan-level dollar maximums.

How do groups submit their request?

Groups can send their request to HHS by mail or email.

Mailing address:

HHS Office of Consumer Information and Insurance Oversight

Attention James Mayhew, Room 737-F-04

200 Independence Ave, SW

Washington, DC  20201

E-mail address:

healthinsurance@hhs.gov

Use “waiver” as the subject of the e-mail

This information was provided by Anthem Blue Cross/Blue Shield.  This content is provided solely for informational purposes.  It is not intended as and does not constitute legal advice.  The information contained herein should not be relied upon or used as a substitute for consultation with legal, accounting, tax and/or other professional advisers.

Health Care Spending Account Changes

As always PMG Agency wants to keep you informed and updated with current information regarding the health care industry and health care reform.  We want to make sure you are aware of these changes that may impact your individual or group coverage.

The health care reform law changes rules for the following spending accounts:

• Health care flexible spending account (FSA)
• Health reimbursement arrangement (HRA)
• Health savings account (HSA)
• Archer medical savings account (MSA)

The IRS has determined that the change in inflation was not significant enough to result in adjustments to the 2011 limits on Health Savings Account (HSA) contributions.  The limits for 2011 are listed below for your reference.

2011 Maximum HSA Contributions 

• Individual contribution:                                                                                                 $3,050
• Family contribution:                                                                                                        $6,150
• Catch-up contribution (over age 55 and not enrolled in Medicare)            $1,000

Additionally, for a health plan to qualify as a “high deductible health plan” for the 2011 calendar year, the health plan will have, at minimum, an annual deductible of $1,200 for single coverage and $2,400 for family coverage.  The annual out-of-pocket maximum is no more than $5,950 for single coverage and $11,900 for family coverage.

Increased penalty for nonqualified HSA and MSA Distributions

The tax penalty on HSA and MSA distributions that are not used for qualified medical expenses is increasing from 10% to 20% of the disbursed amount.  This change is effective for disbursements made during tax years starting on or after January 1, 2011.

Prescriptions required for over-the-counter drugs (OTCs)

Beginning January 1, 2011, members can use health care spending account funds for a medicine or a drug only if the medicine or drug is prescribed by a doctor (or another health care professional who is legally authorized to issue a prescription) in the state in which the OTC drug is purchased.  The only exception is for insulin.  The new standard applies to FSAs, HRAs, HSAs and MSAs.

The prescription requirement applies to OTC medicines and drugs purchased on or after January 1, 2011.  This effective date applies to all plans, regardless of the plan year dates.  This means that the rules will change in the middle of the plan year for all plans that are not calendar year plans (that is, a plan year that begins on January 1 and ends on December 31).

At this point, all other current rules for health care spending accounts continue to apply.  To see lists of qualified expenses, refer to IRS Publication 502: http://www.irs.gov/pub/irs-pdf/p502.pdf  Note:  These lists are not all-inclusive and are subject to change by the IRS.  Consult your tax adviser if in doubt about a particular expense.

As always, if you have any questions regarding any of these changes please feel free to call the PMG office at 260-755-3585.  We want our customers to be informed of changes that may impact their health care coverage.  Thank you for your business, we appreciate you as our customer!

Healthcare Reform Impacts Effective On Or After September 23, 2010

For your convenience, PMG has condensed the changes regarding impacts on Health Care Reform on or after 9/23/2010  into a few bullet points below.  These revisions take effect for Major Medical plans issued on or after 9/23/10.  Plans issued prior to 3/23/10 are considered “grandfathered” and will not receive the benefits below.  Meanwhile, plans issued between 3/23/10 – 9/22/10 will not receive the benefits listed below until their renewal. 

• Unlimited Lifetime Maximum - Lifetime maximums have been eliminated on all of our Major Medical plans.
• Annual Limits - We will remove annual limits as defined by national guidelines.
• Free Wellness Services - All in-network wellness services – as defined by national guidelines – will be covered first-dollar on an unlimited basis.
• Rescissions - The law prohibits rescissions on Major Medical policies, except in cases of fraud or material misrepresentation, which is how USL&H has always operated. 
• Expanded Dependent Eligibility - We will begin accepting dependent children up to age 26 on Major Medical applications, regardless of student or marital status.
• No Pre-Existing Condition Limitations For Children Under The Age of 19 - USL&H has prepared for this provision by no longer accepting child-only applications on our Major Medical plans.  However, we will continue to offer family policies with coverage for dependents under the age of 19.

Important Updates on Federal Health Care Reform

Grandfathering allowed for most standard and non-standard plans As we recently communicated with you, the federal government has issued Interim Final Regulations for the grandfathering provision. Because there are advantages to grandfathering, we will grandfather most standard and non-standard plans in our portfolio. To help you better understand what this means to your clients, we’ve put together this Grandfathering Fact Sheet. It explains: £     More about grandfathering £     What changes can be made without losing grandfathered status £     What changes will result in losing the grandfathered status   This is an important provision for many individuals and group policyholders. You can expect more information about grandfathering, including how we will implement it. As always, please talk with your sales representative if you have any questions.

 

New government website lets consumers compare insurance plans  The U.S. Department of Health and Human Services (HHS) has just launched HealthCare.gov, a website designed to help individuals and small businesses compare both private and public health insurance plans. Through HealthCare.gov, consumers can find information on literally thousands of private and public health care products.

New for 2010: Tax Credit for Small Groups

The IRS recently released materials for those wishing to claim the small business health care tax credit for 2010. A provision of the Patient Protection and Affordable Care Act (PPACA), this tax credit is designed to encourage small groups to offer health care coverage for the first time or enable them to maintain the coverage they already have. It will likely provide assistance to about four million small businesses.

This tax credit can be significant for a qualifying small group. In 2010, the maximum credit is 35% of employer-paid premiums; for tax-exempt organizations, the maximum is 25% of employer-paid premiums. In 2014, the maximum increases to 50% of employer-paid premiums; for tax-exempt organizations, it increases to 35% of employer-paid premiums.  In order to qualify for the credit, the employer must not employ more than 25 employees and the average annual compensation of those employees must not exceed $40,000.

Here’s a look at how a company with 10 employees could benefit:

• Employees: 10
• Wages: $250,000 or $25,000 per worker
• Employer Health Care Costs: $70,000

2010 tax credit: $24,500 (35% credit)
2014 tax credit: $35,000 (50% credit)

For more examples, click here.

While there is no formal guidance yet, the IRS has provided educational resources for small businesses wishing to claim the credit this year. Click here to see the following information:

• Eligibility rules
• Amount of credit
• Three simple steps to determine a small group’s eligibility
• More tax credit scenarios
• FAQs

You can expect more health care reform updates like this one throughout the year. We’re eager to get information out to you as soon as possible, so we can help our clients get the most from the new legislation. As always, we greatly appreciate your business and want to keep our customers informed.

Health Care Reform – Group Coverage Impact

This year has brought the most sweeping reforms to health care coverage since the new Patient Protection and Affordable Care Act.  With over 2,000 pages of new federal law it will affect virtually every facet of the health care industry.

The federal health care reform law will have a substantial impact on employers. Here are the main issues employers will want to be aware of:

 1. Keeping the same coverage

Employers will be able to avoid some of the law’s requirements by keeping their coverage the same after the law’s effective date (March 23, 2010). Unfortunately, it is very unclear at this time what kinds of minor changes will alter coverage or keep it the same; this will be clarified in later regulation.

Changes that must be made to all plans include:

 waiting periods for coverage must be less than 90 days;

 no lifetime benefit maximum limits;

 dependent coverage for adult children up to age 26; and

 no annual limits on certain types of benefits (unless permitted by later-issued regulation).

 2. New benefit and other plan changes

If an employer does not keep its coverage the same, employers will need to make additional changes such as:

 extending 100 percent coverage for preventive care;

 removing any prior authorization requirement or increased cost-sharing for emergency services (regardless of whether the services are provided in or out of network);

 no pre-existing limitation for children under age 19; and

 coverage of routine patient costs in clinical trials for life-threatening diseases.

 3. FSA/HRA/HSA changes

The law also will require changes to these types of accounts. In 2011, employees will no longer be able to receive pre-tax reimbursements from their FSA, HRA or HSA for non-prescribed over-the-counter medications.  The excise tax for nonqualified HSA withdrawals will increase from 10 percent to 20 percent. In 2013, employee contributions to FSAs will be capped at $2,500 annually, with the cap adjusted annually to the Consumer Price Index.

 4. Employee notification of value of coverage and exchange information

Effective in 2011, employers will need to start reporting the value of the employer-sponsored coverage to employees on their W-2s. And in March 2013, employers will need to begin notifying employees about state exchanges and the availability of premium subsidies and free choice vouchers, all of which will be available beginning in 2014.

Watch for future updates as we review these and other mandates and their implications to our industry. As we work to fully understand and implement new legislation, rest assured that our No. 1 priority is to stay focused on our customers each and every day and to meet and exceed their expectations by delivering value while improving their experience.