Federal agencies have issued several pieces of guidance for employee health benefit plan sponsors moving forward on implementing changes required under the health reform law (Patient Protection and Affordable Care Act, or PPACA). The agencies also released guidance for other entities (insurance companies, primarily) that will be involved in health insurance offerings to individuals and small employers when the new exchanges become operational beginning in 2014.
This Client Action Bulletin discusses Patient-Centered Outcomes Research Institute (PCORI) funding, a Medicare Part A payroll tax increase, guidance on transitional reinsurance fees and wellness programs, as well as other regulations related to healthcare reform. The bulletin also provides guidance on actions employers should undertake.
Federal regulatory agencies have explained the means by which employers that sponsor group health plans may determine the employees to be considered “full-time” and, therefore, who must be offered coverage under the Patient Protection and Affordable Care Act (PPACA).
IRS Notice 2012-58, issued by the U.S. Department of the Treasury in coordination with the U.S. Departments of Labor (DOL) and Health and Human Services (HHS), expands on a “safe harbor” available under earlier guidance and specifies methods for calculating the full-time threshold for newly hired, variable-hour, and seasonal employees.
This Client Action Bulletin discusses recently released healthcare law guidance defining “full-time” employee and addressing the 90-day waiting period limitation.
In the ongoing debate over healthcare costs—and especially over the Patient Protection and Affordable Care Act (PPACA) mandates concerning medical loss ratios—it is interesting to revisit a 2011 Milliman report on the commercial health insurance market using financial and enrollment data from the “Supplemental Exhibit.” From the paper’s introduction:
What level of market competition exists in the current health insurance marketplace? Are administrative costs and underwriting margins in teh individual and small group markets significantly higher than in the large group market? How does claim cost experience vary between individual and small group markets?
In the past, these questions have been difficult to answer because insurance carrier financial experience was generally only reported on an aggregate basis rather than at the state level or for a specific segment of the commercial insurance market. Because of the introduction of a new financial exhibit that must be completed with each carrier’s year-end statutory filing, many of these questions can now be answered with greater clarity.
Some of the report’s interesting findings include:
- Significantly higher per member per month (PMPM) administrative costs for individual and small group markets
- Higher medical loss ratios for large group markets
- Market share is most concentrated in the large group market, with 44 states having five or fewer companies representing 90% of market share or more
The paper also covers the influence of rating rules on individual and small group premiums, showing how requirements for community rating affect claim cost ratios across different regulatory regimes.
According to the Internal Revenue Code (IRC), employer health plans cannot discriminate, in either their design or operation, in favor of highly compensated or key employees.
The annual required nondiscrimination testing is a series of calculations performed on enrollment, benefit, and cost data provided by the employer group.
For the majority of employers, the testing process is typically passed without much (if any) needed action. Employers who do not perform the testing annually can be subject to fines and penalties, including the disqualification of all highly compensated employees.
Read more here.
In case your holiday food coma was too intense to keep up on regulations and guidance, we have the top developments (and key links) summarized here:
For a list of retirement developments, visit our sister blog at www.retirementtownhall.com.
An organization supported by the Robert Wood Johnson Foundation, State Coverage Initiatives (SCI), has issued a new paper, “Health care reform and American federalism: The next inter-governmental partnership.” SCI has also launched a blog called “Speaking of States.” Specifically, the SCI paper looks at the state-federal relationship as it pertains to Medicaid expansion, health insurance exchanges, and care management.
The paper raises some interesting points and puts us in mind of several considerations that we have previously blogged about:
The question of how federal and state governments might work better together in a reformed system will no doubt take on increased importance as the reform conversation continues.
Electronic Health Records, Exchanges, Regulation