US Won't Define Required Healthcare Benefits

States will set rules within wide categories

By David Wetzler, Senior Benefit Consultant

In a major surprise on the politically charged new health care law, the Obama administration said that it would not define a single uniform set of “essential health benefits’’ that must be provided by insurers for tens of millions of Americans.


Instead, starting in January 2014, each state will have the power to determine what health benefits must be covered by health insurance policies offered within its borders.


Essential health benefits may vary within 10 broad categories which include preventive care, emergency services, maternity care, hospital and doctors’ services, and prescription drugs.
The move could lead to significant state-by-state variations in what would be covered under the health care program, much like the current differences in state Medicaid programs and the Children’s Health Insurance Program.


On December 16, 2011, the Department of Health and Human Services (HHS) issued a bulletin outlining proposed policies and the approach it intends to pursue in rulemaking for defining Essential Health Benefits (EHB). Per the Patient Protection and Affordable Care Act (PPACA), beginning on January 1, 2014, non-grandfathered Individual and Small Group plans offered inside and outside the Exchanges must cover the EHB. In addition, PPACA prohibits the use of lifetime and annual limits on the dollar amount of EHB.


In developing the regulation, HHS stated that its aim is to balance comprehensiveness, affordability, and State flexibility. It is, therefore, proposing to allow each State to select an existing health plan as a “benchmark” to establish the services and items included in the Essential Health Benefits package for 2014 and 2015.


States will choose from one of four health insurance plan options as a benchmark:

• the largest plan based on enrollment in any of the three largest small group products in the State
• any one of the three largest State employee health plans
• any one of the three largest Federal employee health plan options
• the largest HMO plan offered in the State’s commercial market 

HHS will propose that the default for States choosing not to set a benchmark will be the small group plan with the largest enrollment in the State. For 2016 and beyond, HHS would reassess the proposed benchmark process.


The bulletin did not address cost sharing, e.g., deductibles, copayments, and coinsurance, which will be covered in future guidance. Cost-sharing rules will determine the actuarial value of the plan. It also does not address how this state-by-state approach is to be applied to the ban on lifetime and annual limits for plans that cover people in multiple States.


However, the bulletin did reaffirm that Essential Health Benefits must include items and services within the following 10 benefit categories: 

1. ambulatory patient services;
2. emergency services;
3. hospitalization;
4. maternity and newborn care;
5. mental health and substance use disorder services, including behavioral health treatment;
6. prescription drugs;
7. rehabilitative and habilitative services and devices;
8. laboratory services;
9. preventive and wellness services and chronic disease management; and
10. pediatric services, including oral and vision care

Opponents of health reform have said that the PPACA removes the authority of states to regulate health insurance. This move may be the administration's response to those criticisms.

This document is for general informational purposes only. While we have attempted to provide current, accurate and clearly expressed information, this information is provided "as is" and SRA Benefits makes no representations or warranties regarding its accuracy or completeness. The information provided should not be construed as legal or tax advice or as a recommendation of any kind. External users should seek professional advice from their own attorneys and tax and benefit plan advisers with respect to their individual circumstances and needs. This message has been sent to you to provide information that may be helpful to your business and to provide an opportunity to give us your requests and general feedback.

Employees Seek Health Care Information 24/7

Social Media Plays Key Role 

By Piotr Zygmunt, Benefits Consultant

More and more consumers are turning to social media for health care decisions. According to the Dayton Business Journal, 41 percent of people said they use social media as a health care resource.  In fact, 94 percent said they turned to Facebook for medical content for diet and exercise tips.  In addition some respondents even said the information was likely to impact their future health decisions.   In response to this, companies in the health care industry are taking the appropriate steps to make their social media presence known.

Consumers are using these social media sites for multiple purposes, such as:

• Viewing health education videos;
• Getting diet and exercise tips;
• Learning about upcoming health events;
• Increasing awareness of diseases, and
• Discovering health statistics.

In a new survey that was conducted by the National Research Corporation, one in every five Americans use social media for healthcare information, specifically Facebook, YouTube, and Twitter. What can companies do to help their employees access health care information?  Think electronic media.  Here’s a few things to consider:

• Develop a company-customized web portal for benefit plan information;
• For multi-site locations, use video for sharing enrollment processes; 
• Use company-sponsored social media tools to promote wellness initiatives;
• Consult with your broker for other ideas, and to help ensure the necessary privacy/legal parameters are in place when sharing health-related news.

Industry experts agree that the use of social media for delivering information 24/7 to individuals will continue to grow.  Companies will be ahead in the health care communication game by planning a social media strategy for their employees as well.

Lifetime ‘Dose’ of Excess Weight Linked to Diabetes Risk

Type 2 diabetes epidemic in the U.S. may loom even larger than previously predicted. 

By David Wetzler

President, Benefits Consultant

It's long been known that obesity increases diabetes risk, but a new study finds that the amount of excess weight someone carries -- and how long it's carried -- can make that risk even higher.

That's especially worrisome given the growing number of obese children and teens who will spend more years of their lives obese than prior generations, researchers from the University of Michigan Health System warn in a university news release.

"The relationship between weight and type 2 diabetes is similar to the relationship between smoking and the risk of lung cancer," said the study's lead author Dr. Joyce Lee, a pediatric endocrinologist at the University of Michigan C.S. Mott Children's Hospital. "The amount of excess weight that you carry, and the number of years for which you   carry it, dramatically increase your risk of diabetes."

Researchers examined information on roughly 8,000 teens and young adults and calculated how far above a certain body mass index (or BMI, a calculation based on weight and height) they were and for how long. The study found those with a BMI of 25 or higher (overweight) or 35 and higher (30 and up is obese) for a greater length of time had a higher risk of diabetes. 

For example, individuals with a body mass index of 35 for 10 years were considered to have the equivalent of 100 years of excess BMI -- a considerable cumulative "dose" of excess weight. 

What is the economic consequence to the taxpayer and employers?

The disease will cost the nation almost $3.4 trillion in the 10 years through 2021, with more than 60 percent paid for by the U.S. government, according to a study conducted by United Healthcare.  Employers will bear the brunt of the remaining costs – especially as health care reform forces employers to increase their contributions to escalating insurance premiums which will be driven in part by the rising costs of treating the disease. 

More information

The U.S. Centers for Disease Control and Prevention provides more information on the health consequences of obesity.

To help keep employees fit, SRA Benefits consultants on wellness programs for businesses.  Contact info@SRABenefits.com.

One Bright Spot in the Health Care World: Wellness Programs

by Robert Falke, Benefits Consultant

Health Care Reform is still full of uncertainty and is making many employers nervous. Some, however, are taking advantage of one bright spot: wellness.

 
As the Department of Health and Human Services (HHS) pushes out new regulations from the Patient Protection Affordable Care Act (PPACA) and we inch closer to the implementation of mandated State Health Exchanges, employers are, rightfully, concerned about their health care costs.  Without firm confidence of the exchange system, some employers are choosing to address costs by helping change employee’s habits and improving their health.

The PPACA allows employers to offer incentives to employees who participate in wellness plans and/or meet certain health standards.  While the current incentive cap is 20 percent of the cost of coverage, the law increases the reward amount beginning in 2014, when rewards may be up to 30 percent of the employee’s cost of coverage.    The participating employees see an immediate “carrot” in the form of lower monthly contributions.  The employer’s benefit will accrue over time as health claims and related expenses decrease with improved employee health. 

Now is a prime time for companies to consider wellness initiatives. Building a wellness plan, however, takes some planning and follow-through to get good return on your investment.  One important decision is how you will structure your incentive.  Some questions to ask:

• Are you going to use a carrot or a stick approach?
• What wellness attributes will be measured?
• How are you going to communicate the plan and incentive to your employees?
• How are you going to keep your employees engaged long term? 

SRA Benefits has a history of developing plans with proven results in bending the cost curve and ultimately affecting the cost of the medical plan.  We help clients take full advantage of the PPACA regulations and develop a results-based incentive program that can not only impact medical claim costs, but can impact employee satisfaction.  Aren’t those bright spots worth investigating? 

Medicare Part D Annual Enrollment Period Changed to October 15 Employers Must Send Notices Before October 15

LEGISLATIVE BRIEF

For 2011 and future years, the Medicare annual enrollment period for Part D (Prescription Drug coverage) will be October 15th ‐ December 7th. As a result, plan sponsors must provide Part D “creditable coverage” notices prior to October 15th of each year.

Most plan sponsors use the CMS Model Medicare Part D Notices of Creditable Coverage and Non‐Creditable Coverage to notify affected plan participants. These Model notices have been amended to reflect the October 15th date. Click here to access the model notices at the CMS website. 

Background 

The Medicare Modernization Act requires group health plan sponsors that offer prescription drug coverage to notify Medicare‐eligible plan participants (employees and dependents) as to whether their prescription drug coverage is “creditable coverage” – which means the coverage is expected to pay on average at least as much as the standard Medicare Part D prescription drug coverage.

These notices must be provided at least once annually, prior to the beginning of the Part D annual enrollment period and also if the employer provided coverage changes or if the individual requests a copy of the notice. In prior years the Medicare annual enrollment 

period for Part D began November 15th, so plan sponsors were required to provide “creditable coverage” notices prior to November 15th of each year. The federal Health Care Reform Act (Affordable Care Act) changed the Medicare annual enrollment period to October 15th – December 7th, so plan sponsors must now provide creditable coverage notices prior to October 15th of each year.

The Centers for Medicare and Medicaid Services (CMS) provide Model Medicare Part D Notices (available on the CMS website), which most employers use to notify Medicare‐eligible plan participants. These Model notices have now been amended to reflect the October 15th date. (The amended Model Notices say “For use on or after April 1, 2011” in the heading.)

The reason plan sponsors are required to provide Part D Notices is because a penalty will be imposed if an individual, after becoming eligible for Medicare Part D coverage, has a lapse of “creditable” prescription drug coverage for a period of at least 63 days. Additionally, such individuals may have to wait until the following October to join. An individual can elect either Medicare prescription drug coverage or other “creditable coverage” to avoid having a lapse in coverage. Thus, Medicare‐eligible participants in employer group health plans must know whether or not the employer group coverage is “creditable” so they do not unwittingly incur a late enrollment penalty.

Additional Details on the Disclosure Requirements 

Group health plan sponsors to whom this disclosure requirement applies include employers and Unions; multiple employer welfare arrangements (MEWAs); federal, state and local government employers; and churches.

The Part D Notice must be provided not only to Medicare‐eligible active working employees and their dependents, but also to participants who are retired, on COBRA, or disabled and covered under the employer’s prescription drug plan. 

Action Steps for Plan Sponsors 

If you provide prescription drug benefits through an insurance contract, you will also need input from your carrier as to whether or not your prescription drug coverage is creditable and to ensure that you correctly complete some of the information on your Part D Notice. 

Although the requirement is only that “Medicare eligible” individuals be provided this notice, employers often provide it to all plan participants and dependents because of the practical difficulty of knowing who may be Medicare‐eligible. 

Plan sponsors who use the CMS Model Notices should use the recently‐updated Model Notices which are available at the CMS website. Click here.

This Benefits Compliance bulletin is general in nature and is not intended or provided as legal advice or opinion in any particular case. If you have questions, contact your SRA Benefits Account Manager or benefits consultant. 

Birth Control to be Covered Free of Co-Pays Beginning 2012

By David Wetzler, President, SRA Benefits

(August 2011) The US Department of Health and Human Services (HHS) just announced that beginning August 1, 2012, women in the United States will have their birth control covered, free of co-pays.

In addition to insurance coverage for birth control, the the HHS is also mandating a wide range of recommended preventive services without cost sharing, which includes:

• Well-woman visits;
• Screening for gestational diabetes;
• Testing for the human papillonmavirus (HPV) as part of cervical cancer screening for women age 30 and older;
• Counseling about sexually transmitted infections
• Counseling and screening for HIV
• Counseling on breast-feeding, including breast-feeding equipmentCounseling on interpersonal and domestic violence.

“New health plans will need to include these services without cost sharing for insurance policies with plans years beginning on or after August 1, 2012,”  the HHS said.   

For more information, see http://www.hhs.gov/news/press/2011pres/08/20110801b.html  or contact your SRA Benefits consultant.

Cheaper Drug Prices Become Reality As Patents Expire

By David Wetzler

President and Benefit Consultant

Over the next 14 months, generic drugs for seven of the world's best-selling drugs will become available as brand-name drug patents expire, including the top two: cholesterol fighter Lipitor and blood thinner Plavix.

Competition from generic drugs will decrease brand-name sales, causing drug prices to plummet for patients, taxpayers who help pay for prescription drugs through government prescription plans and employers who sponsor health plans.

Generic medicines are chemically equivalent to the original brand-name drugs and work just as well for nearly all patients. When a drug loses patent protection, often only one generic version is on sale for the first six months, so the price falls a little bit initially. Then, several other generic makers typically jump in, driving prices down dramatically. 

Last year, the average generic prescription cost $72, versus $198 for the average brand-name drug, according to consulting firm Wolters Kluwer Pharma Solutions. Those figures average all prescriptions, from short-term to 90-day ones.

Average copayments last year were $6 for generics, compared with $24 for brand-name drugs given preferred status by an insurer and $35 for nonpreferred brands, according to IMS Health.

Among the drugs that recently went off patent, Protonix, for severe heartburn, now costs just $16 a month for the generic, versus about $170 for the brand name. And of the top sellers that soon will have competition, Lipitor retails for about $150 a month, Plavix costs almost $200 a month and blood pressure drug Diovan costs about $125 a month. For those with drug coverage, their out-of-pocket costs for each of those drugs could drop below $10 a month. 

W-2 guidance eases burden for small biz, retiree health

When the Patient Protection and Affordable Care Act was signed into law by President Obama in March 2010, one of the provisions that employers immediately recognized as potentially burdensome was the requirement that the cost of employer-sponsored group health plan coverage be included on an employee’s Form W-2.

While this requirement was originally scheduled to be effective for taxable years beginning on or after Jan, 1, 2011, the Internal Revenue Service granted a one year extension in late 2010 so that the requirement now applies beginning with the 2012 Forms W-2.

Two potentially significant issues that were immediately identified by employers under this new enhanced reporting requirement were how small employers and retiree health care plans would be impacted.

In Notice 2011-28, which was published by the IRS on March 29, 2011, guidance is now available with respect to both of these issues.

Small employer exception

While the general rule is that all employers that provide employer-sponsored group health plan coverage during a calendar year are subject to the enhanced Form W-2 reporting requirement, a limited exception now exists for small employers.

Specifically, in the case of the 2012 Form W-2 (which must be delivered to employees on or before Jan. 31, 2013), an employer is not subject to the enhanced reporting requirement for any calendar year if the employer was required to file fewer than 250 Forms W-2 for the preceding calendar year.

Consequently, if an employer files fewer than 250 2011 Forms W-2, the employer would not be subject to the enhanced reporting requirement for the 2012 Forms W-2.

This exception will be very helpful to those employers that do not reach the 250 Forms W-2 threshold. In addition, while the exception specifically applies with respect to the 2012 Form W-2, the exception is available until the issuance of further guidance. Therefore, it is possible that this exception will be extended into later taxable years. In any event, the earliest that such small employers would be required to comply is the 2013 Forms W-2 in January 2014. While the exception applies with respect to the 2012 Forms W-2, the determination of whether the 250 Form W-2 threshold has been reached is based on the prior year (i.e., 2011).

However, it is important that employers who may be eligible for this small employer exception in 2012 are aware of the exception throughout 2011.

Retiree health care plans

Upon passage of the PPACA, there was concern about whether the enhanced Form W-2 reporting requirement would be applied to retirees that receive medical coverage under an employer-sponsored retiree health care plan.

Notice 2011-28 confirms that a Form W-2 is not required in this scenario, as an employer is not required to issue a Form W-2 including the aggregate reportable cost to an individual to whom the employer is not otherwise required to issue a Form W-2.

Therefore, individuals such as retirees or other former employees receiving no compensation from the employer do not need to receive a Form W-2 based solely upon the newly enhanced reporting obligation related to employer-sponsored group health plans.

The guidance that the Form W-2 reporting requirement does not apply to retirees receiving health care coverage resolves a key outstanding issue under PPACA and will be greeted favorably by employers offering such coverage.

In addition, by not having to an issue a Form W-2 to these individuals, such individuals will not be counted with respect to the 250 Forms W-2 threshold for the small employer exception noted above.

Notice 2011-28 is very helpful in resolving two of the key questions that remained with respect to the enhanced Form W-2 reporting requirements related to employer-sponsored group health plans.

Employers should consult with their employee benefits counsel and tax advisors to determine the impact that this guidance will have on their reporting obligations.

Two health care reform provisions repealed

Congress acted recently to repeal two provisions of PPACA that had concerned many employers: the expanded 1099 reporting requirement and "free choice" vouchers.

The first provision would have mandated businesses to report annual payments exceeding $600 for gross proceeds and amounts in consideration for property on Form-1099 Misc. beginning in 2012. This expansion of 1099 reporting rules was unrelated to health care but was included in the legislation as an attempt to raise $17 billion over ten years toward the $1 trillion projected cost of health care reform.

Both the House and Senate made it a priority to remove the controversial 1099 provision from PPACA. President Obama agreed and signed the repeal into law on April 14, 2011.

As a result of the last-minute compromise to avoid a government shutdown, Congress eliminated another key PPACA provision.

The "free choice" voucher provision would have taken effect in 2014 and required employers in very limited circumstances to give employees a voucher equal to the value of the employer's contribution to health coverage premiums. Recipients would then have been able to use these vouchers to help pay premiums for coverage purchased from state Health Insurance Exchanges.

Labor unions and some employer groups were concerned that younger and healthier employees might prefer to buy lower-cost, voucher-subsidized insurance from the Exchanges, reducing the size of risk pools and driving up premiums for employer health plans.

The repeal of these two provisions demonstrates that Congress views health care reform as an ongoing process. No one knows what might go next - Stay tuned.

New Health Savings Account (HSA) Limits Announced for 2012

The IRS has just released Revenue Procedure 2011-32 which provides information on the limits for HSA plans for 2012. The annual contribution limitation on deductions for individuals with self-only coverage under a high deductible health plan will be $3,100. The deduction limitation for an individual with family coverage will be $6,250. These both represent small increases over the limits for 2011.

In order for a plan to be considered a “High Deductible Health Plan” for 2012, the deductible for self-only coverage must be at least $1,200 and $2,400 for family coverage. These minimums have not changed from 2011. The maximum out of pocket expenses may not exceed $6,050 for self-only coverage and $12,100 for family coverage in 2012. dw