3/29/2012

Grandfathered Health PlansACA includes a “grandfathering” provision for some group health plans and individual market policies that were in effect on the date ACA became law, March 23, 2010. Grandfathering exempts plans and policies from implementing some requirements of ACA if they don’t make significant plan changes. Blue Cross and Blue Shield of Texas has had quite a number of groups maintain grandfathered status to date.

Early Retiree Reinsurance ProgramThe Early Retiree Reinsurance Program (ERRP) provides reimbursement to participating employment-based health plans for a large portion of the cost of health benefits for early retirees and their eligible spouses, surviving spouses and dependents. Congress appropriated $5 billion for this temporary program that was originally scheduled to end by Jan. 1, 2014. However, in February this year, the Administration announced that funding for the program had been depleted.

Medicare ChangesIn June 2010, about 4 million seniors received Medicare prescription drug rebate checks for $250 in the mail. The rebates were the first step in closing the Medicare Part D prescription “doughnut hole” that leaves seniors with a gap in coverage after they have maxed out of their initial coverage, but before they reach the catastrophic coverage level. In 2011, seniors received a 50-percent discount on brand-name drugs. In addition, Medicare now pays for annual wellness visits and preventive services, such as breast, colon and prostate cancer screenings.

Medical Loss RatiosACA’s Medical Loss Ratios (MLR) requirements went into effect in 2011, with rebates from insurers – if any are needed – issued by Aug. 1, 2012. The calculation of rebates is based on the percentage of premiums spent on medical expenses and quality improvement activities. If an insurer’s MLR is less than the applicable MLR standard, the insurer must provide rebates. MLR calculations and rebates continue annually.

Preventive ServicesACA expands coverage of preventive health services of non-grandfathered plans. Services such as screenings, immunizations and health counseling provided by network providers are covered at no cost to the individual member.

Coverage of Dependent Children to Age 26One of the first significant provisions of ACA to go into effect for all plans and policies was one that expanded coverage for adult children in September 2010. The provision requires group health plans and insurers that offer health insurance for dependent children to make that coverage available until the child dependent reaches age 26. It also removes limiting factors for that coverage, such as marital status, residency, employment, student status or financial dependency, and provides consistency – requiring the same level of benefits for all dependent children. Grandfathered health plans may exclude an adult child under age 26 from coverage on the parent’s plan if the dependent is eligible for another employer-sponsored health plan.

Appeals ACA sets new guidelines expanding the appeals process of non-grandfathered health plans, including what can be appealed and how many steps of appeals must be afforded members. Members of non-grandfathered plans can appeal decisions about paying claims, eligibility for coverage, or ending coverage. If the denial was based on medical necessity or experimental treatment, members can request an “external review” by an independent third party once the internal appeal process is over. The provision also aims to help members understand their appeals rights, outlining what and how appeals rights information is explained to members. This provision went into effect with plan years after September 2010.

Essential Health BenefitsA key piece of the law’s intent to expand coverage is the provision that outlines what all health plans and policies must include as the baseline level of coverage. These “essential” health benefits will be included on all plans sold on the public exchanges in 2014. Until then, the law requires that plans offering essential health benefits do so without limiting the benefits with annual dollar limits or lifetime maximums. In some instances, the removal of limits can be done in phases, and non-grandfathered plans that do not currently offer a benefit deemed essential will not have to add it until 2014.

No Pre-existing Condition ExclusionsOne goal of ACA is to discontinue the use of pre-existing condition exclusions. Beginning in September 2010, ACA prohibited denial or limitation of coverage for children due to a pre-existing medical condition. This provision currently applies to individual and family policies that offer coverage for children, but it does not apply to grandfathered plans. Beginning Jan. 1, 2014, this provision will apply to everyone. Also beginning 2014, no coverage can exclude benefits for a specific medical condition.

RescissionAlso effective in September 2010 was the provision prohibiting retroactive rescission or cancellation of coverage except in cases of fraud or intentional misrepresentation of material fact, or for failure to pay for the coverage. A group health plan or health insurer must give written notice at least 30 calendar days before coverage may be rescinded or cancelled.

Much work is still left to be done. Two of the most pressing ACA changes on the horizon for the marketplace are the implementation of the Summary of Benefits and Coverage and preparation for participating on the public exchanges.

Summary of Benefits and CoverageBeginning Sept. 23, 2012, all insurers and group health plans must begin providing members a Summary of Benefits and Coverage (SBC) at certain specified times. The SBC is intended to make it easier for consumers to understand their insurance plans.

ExchangesPublic exchanges are expected to play a key role in providing affordable, quality health coverage to more people across the U.S. The ACA model calls for states to establish their own exchanges. For those states that don’t, a federal exchange will be offered to their state residents. Jan. 1, 2014, is the “go live” date for exchanges, and an intense effort is underway to be ready in time. The new role exchanges will play in the health insurance industry also creates challenges and opportunities for employer-sponsored plans and individual policy sales outside the exchanges.

Presented by Shelly Alvarez

Shelly Alvarez Insurance & Financial Svcs., PLLC

19141 Stone Oak Pkwy. Suite 104

San Antonio TX, 78258

(210) 827-8787