Good Neighbor Insurance (dev.gninsurance.com and www.gninsurance.com) is continuing to update our clients on the new health insurance laws. There are six major coverage options for those in the US and even though some of the rules and regulations are similar for all many differences are there and it all depends on how old you are and for whom you work. Many critical details of this new insurance law will be clarified in the months and years to come.
These six major coverage options are:
(1) Individual or family coverage (private health care plans)
(2) Employee/employer group option for small businesses (typically under 50 employees)
(3) Employee/employer group option for large businesses (typically larger than 50 employees)
(4) Exchange options through the state you are residing in (fully integrated 1-1-2014 and are quasi-government and private insurance coverage combined)
(5) Medicare (which include Parts A, B, C, and D) for those 65 years onwards
(6) Full government health plans like Medicaid, CHIP, TRICARE, VA and other coverage plans as may be designated by the Department of Health and Human Services based mostly on financial criteria and/or military service.
The president signed the Patient Protection and Affordable Care Act (PPACA) into law on March 23, 2010. Additionally, he signed the Health Care and Education Reconciliation Act of 2010 on March 30, 2010, which made amendments to the PPACA law. The president’s signature on the reform bills triggered a series of major changes to the health care system that will affect every American. There were several changes that became effective upon President Obama’s signature. The rest of the changes are scheduled to become effective at varying times over the next several years.
The law is wide-reaching and encompasses more than 2,700 pages and many more pages of expected new regulation. Many of the specific details are yet to be finalized by federal agencies and state officials. This guide outlines some of the major sections of the law, and we’ve indicated when guidelines are pending from the United States Department of Health and Human Services (HHS) and other federal or state agencies. These guidelines will help all health insurance companies comply more completely with the reforms.
Adult Children Coverage
Q – Can you explain students and the new coverage until 25, even if married scenario?
A – Actually, the coverage is to age 26. All “adult children” are eligible for enrollment in their parent’s plans as of the first day of the first plan year following 9/23/2010. The only exception is for grandfathered plans, if the “adult child” has coverage through another employer sponsored plan (their own or a spouses) they are excluded. The special enrollment must be 30 days long and there is a DOL Model Notice that must be distributed.
Q – Is your interpretation that all plans including grandfathered plans have to insure the young adult up to age 26 – only exception to the grandfathered plans is they don’t have to offer to the young adult that is eligible for group coverage elsewhere. Does this mean all others under 26, have to be offered the coverage grandfathered or not?
A – Yes, all plans that include dependent coverage anyway, including grandfathered plans, must offer coverage to adult children to age 26. The exception is that grandfathered plans need not offer it to adult children if they have coverage through their own employer or their spouse’s employer.
Q – Is a Short Term Medical plan considered “creditable coverage” under HIPAA?
A – If the STM issues a certificate of creditable coverage. Not all STM’s issue certificates.
Essential Benefits and Individual Plans
Q – When are Individual plans required to incorporate the Essential Benefits?
A – For 2010, Essential Benefits are only addressed in conjunction with the annual limits. This applies to all group plans and non-grandfathered individual plans. However, if the benefit is not part of the individual policy it is currently not required to be included, but if it is, the annual limits come into play.
Q – Maternity is not mandatory on Individual plans because the benefit is not part of the policy, correct?
A – At this time that is correct.
High Risk Pools
Q – Can people who meet the requirements purchase insurance today from the high risk pool in AZ?
A – There is no high risk pool in AZ, the only high risk pool available to Az residents is the federal pool. www.pcip.gov
Q – And am I reading correctly, if he/she was on a Short Term plan, those are not considered credible coverage?
A – Depends, some STM’s are creditable and some are not. If a Certificate of Creditable Coverage is available from the issuer, then it’s creditable.
Q – I have a client that has RA and her COBRA payments are killing her- could she go either without insurance or a limited benefit plan for 6 months and then join this pool?
A – To go on the high risk pool, she must be 6 months bare – limited medical would be okay, but STM would depend on whether it’s a creditable plan.
The Pre-existing Conditions Insurance Plan (Federal High Risk Pool)
Regulations further explain that in order to be eligible to enroll, the individual must be without creditable coverage for the 6 months prior to applying for PCIP.
Eligibility for the PCIP Program (§ 152.14)
Under section 1101(d) of the Affordable Care Act and subparagraphs (1), (2) and (3) of § 152.14(a) of this interim final rule, an individual is eligible to enroll in a PCIP if he or she: (1) Is a citizen or national of the United States or is lawfully present in the United States as determined in accordance with section 1411 of the Affordable Care Act; (2) has not been covered under creditable coverage, as defined in section 2701(c)(1) of the Public Health Service Act as of the date of enactment, during the 6-month period prior to the date on which he or she is applying for coverage through the PCIP; and (3) has a pre-existing condition, as determined in a manner consistent with guidance issued by the Secretary. We further provide in § 152.14(a)(4) that an individual must be a resident of a State that falls within the service area of a PCIP.
Since both limited benefit and short term plans are not considered creditable coverage, having those types of plans will not compromise the individual ‘ s eligibility for PCIP.
Below is the definition of creditable coverage:
“What is creditable coverage?
Most health coverage is creditable coverage, such as coverage under a group health plan (including COBRA continuation coverage), HMO, individual health insurance policy, Medicaid or Medicare.
Creditable coverage does not include coverage consisting solely of excepted benefits, such as coverage solely for limited-scope dental or vision benefits”
PPACA Summary of Benefits
The 60-day advance notice issue has proven to be a bit confusing. Section 2715 of PPACA relates to summary of benefits, which is not required until 24 months from enactment (March 2012 – this is a NEW form). Interim Final Regulations specifically state that PHSA (Public Health Services Act – originally enacted in 1944) section 2715(d)(4), which “requires a plan or issuer to give 60 days advance notice to an enrollee before any material modification will become effective” may apply. This is talking about the Summary of Material Modifications. There may need to be additional guidance, but as the article makes clear, employers must still comply with the Summary of Material Modifications requirement.
HSAs, FSAs, HRAs and Archer MSAs
Currently, if employees use funds from an HSA or Archer MSA for nonqualified
medical expenses, they are subject to an excise tax (10 percent
for HSAs, 15 percent for MSAs). This tax increases to 20 percent on January 1, 2011.
Limited Benefit Plans
Q – Do you know if the Limited Benefit Plans are considered as creditable coverage on the High Risk program?
A – Creditable Coverage that is recognized by the Federal high risk pool, is coverage for which the individual receives a certification of creditable coverage. Generally, these are not provided by limited medical plans.
Q – Under the new Health Care Reform plan will Medicare still be around? Will there still be Medicare replacement policies?
A – There are going to be a number of changes to Medicare (specifically the Medicare Advantage plans), but yes, it will still exist.
Over the Counter Drugs – HSAs, FSAs, HRAs and Archer MSAs
PPACA will bring changes to what is considered a qualified medical expense for FSAs,
HSAs, HRAs and Archer MSAs.
Beginning January 1, 2011, OTC drugs will no longer be considered qualified medical expenses for any of those health accounts
o Insulin is the one exception to this rule
o For any other OTC drug, employees cannot use funds from any of those accounts, unless it is prescribed by a physician
Q – On the patient protection – the notice states “when applicable”…and for plans and issuers that require or allow for the designation of a primary care provider…or provide coverage for OB or Gyn care and require the designation… So, this notice only has to go out if the plan has these, such as an HMO?
A – That is correct. If the plan does not require designation of a primary care physician, there is no need for this notice.
Real Estate Sales Tax
Q – I received something that stated “Did you know that if you sell your house after 2012, you will pay a 3.8% tax on it? That’s $3,800 on a $100,000 home, etc. When did this happen? It’s in the healthcare bill”. Is this true, or bogus?
A – This is bogus. The additional 3.8% that they are referring to is the additional Medicare Contribution for individuals earning more than $200,000 and joint filers earning more than $250,000 on certain unearned income(i.e. rents and royalties).
Doug Gulleson loves to scuba dive overseas and makes sure he has his US health care and overseas health care, www.gninsurance.com ,information with him at all times when he travels Keep our blog close by you, www.gntravelinsurance.com, for continual updates on the changes with the US health care system.