Year-End Legislative Round Up – On to 2010
The following provides a brief overview of the key federal legislative changes impacting employer group health plans in late 2009:
Health Care Reform
The Senate passed a sweeping health care reform bill on Christmas Eve and must now set about reconciling it with the House bill which passed on November 7 with the goal of passing a final bill into law in early 2010. During this critical period, it remains essential for brokers and consultants to continue to lobby Congress and special interest groups to pass legislation that will achieve the initial key goals of health care reform which are coverage for more individuals in a fiscally responsible manner and preservation of employer-sponsored health care plans.
The Senate bill (H.R. 3590), the “Patient Protection and Affordable Care Act”, is expected to cost $871 billion over the next ten years and insure an additional 31 million individuals, although it is estimated 23 million will remain uninsured. The main tenants of the bill include doing away with pre-existing condition exclusions (effective in 2010 for children and applying to adults starting in 2014), a significant expansion of Medicaid, a mandate for low and middle income individuals to carry health insurance (with subsidies to help them pay for it based on income) and the creation of a national insurance exchange or marketplace where individuals and small businesses could buy insurance. The bill is projected by the CBO to hold federal deficits to $132 billion less than they otherwise would be over the next decade, due to new taxes and other changes. To pay for the program, the measure would impose cuts in Medicare payments of $480 billion over the next ten years (a key area of Republican opposition). The bill would also impose substantial new fees on insurers, medical-device makers, pharmaceutical makers and others and establish a tax on insurers offering high-value health policies. Additionally, the Senate bill: imposes a 40% excise tax on health coverage offered by employers with a value greater than $8,500/$23,000/year; limits health care flex spending account deferrals to $2,500/year; increases the medical expenses adjusted gross income deduction from 7.5% to 10% for those under 65; increases the Medicare hospital insurance payroll tax by 0.9% on income in excess of $200,000 ($250,000 joint returns); imposes a 10% excise tax on indoor tanning services (replacing a proposed tax on cosmetic surgery); requires employers with more than 200 employees to automatically enroll new full time employees in their group health plan after an eligibility waiting period; requires employers receiving the Medicare Part D Retiree Drug Subsidy to include the payment in income for tax purposes; and requires employers who provide health insurance coverage and make a contribution towards this coverage on behalf of their employees to provide “free choice vouchers” to qualified employees for the purchase of qualifying health plans through the exchanges.
COBRA Subsidy Extension
Passed as part of the Department of Defense Appropriations Act of 2010 (HR 3326). The bill expands the COBRA subsidy enacted under the ARRA in 2/2009. The key terms of this extension include: the subsidy remains at 65% by the employer, for involuntary terminations, with individuals paying 35% (employers will continue to obtain reimbursement of the 65% subsidy through quarterly tax credits); expands the ARRA’s COBRA premium subsidy period from 9 to 15 months; extends the COBRA subsidy qualifying period from 12/31/09 to 2/28/10 (involuntary termination and loss of coverage must occur during this period); a re-enrollment period must be made available for individuals whose subsidy eligibility lapsed prior to the effective date of the extension; for those who paid the full cost of COBRA, the excess must be refunded or credited toward future premiums; plans will be obligated to provide a notice to COBRA subsidy-eligible individuals explaining the extension; individuals will have 60 days from the law’s effective date or 30 days from the date the explanatory notice is given, whichever is later, to re-establish entitlement to the subsidy and pay for coverage.
The Genetic Information Nondiscrimination Act (GINA)
Interim final rules under GINA are effective for plan years beginning after 12/7/2009 and effective during the 2010 plan year. They prevent group health plans from discriminating on the basis of genetic information and limit the collection of any information by employers that could contain genetic information. The interim rules prevent employers from asking family history questions (questions regarding uncontrollable genetic health issues) on health risk assessments, health risk questionnaires or for disease management or wellness program reasons. This interim rule has required many employers to revise their questionnaires for 1/1/2010 enrollments or to re-issue questionnaires already distributed for 1/1/2010 enrollment.
Mental Health Parity and Addiction Equity Act
Effective for plan years beginning after 10/3/2009. The law applies to employers with more than 50 employees who provide mental health and substance abuse coverage under their group health plan. While employers are not required to provide these benefits, those who do may not impose any stricter financial requirements on mental health or substance abuse coverage under the plan than for medical and surgical coverage. Briefly, this means: plans may not have higher cost sharing provisions for mental health and substance abuse benefits (e.g. deductibles, co-pays, coinsurance) than those for medical and surgical coverage; plans may not have stricter annual and lifetime dollar limits or more restrictive limits on the number of office visits or similar restrictions on the duration of coverage for mental health or substance abuse than for medical or surgical treatment; if the plan provides non-network benefits for medical and surgical services, they also must provide them for mental health and substance abuse and they cannot be subject to stricter financial requirements or treatment limitations than those that apply to non-network medical and surgical services; and, determinations of medical necessity or denial of benefits must be provided for mental health and substance abuse services.
Michelle’s Law
Effective for plan years beginning after 10/9/2009. It applies to group plans if they cover dependents and use student-status as a means of determining whether or not an individual is a dependent. It prohibits group health plans from terminating a college student who is on medical leave from school or has had to reduce their college status to part-time for medically necessary reasons for one year after the first day of the medically necessary leave of absence, or until the date coverage otherwise would terminate under the terms of the plan (e.g., exceeding the plan’s age limits).
Children's Health Insurance Program Reauthorization Act (CHIPRA)
The passage of CHIPRA last year created special enrollment rules effective 4/1/09 which require employers to amend their plans to allow special enrollment rights (similar to a qualifying event under HIPAA) for individuals that become eligible for state-paid coverage under CHIP or lose their CHIP eligibility. In addition, if your state offers a CHIP premium assistance program to help subsidize employer sponsored coverage as an alternative to CHIP enrollment, employers must provide their employees with annual notification of the existence of the premium assistance program.
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