Health Care Reform Checklist: Provisions, Obstacles and Solutions HEALTH CARE REFORM PROVISION: COVERAGE FOR CHILDREN UNTIL AGE 26 Summary of Benefit: Benefits are the same as those for other dependent children. The adult child no longer must be a student, live at home or be financially dependent. They can even be married, although coverage does not have to be provided to the spouse or children from the marriage. Obstacles: Additional cost for additional years of dependent coverage. The employer may want to shift some of the costs of extended coverage. Be prepared to: Request average claims costs for employees in the same age bracket Make sure that terms are the same as for other dependent children ELIMINATE LIFETIME LIMITS ON BENEFITS Summary of Benefit: All plans must provide unlimited coverage for essential benefits effective January 1, 2011 Obstacles: Some plans may limit the amount the plan will pay on behalf of the individual over a lifetime (i.e. $1 million over a lifetime). Eliminating these limits will add cost to the plans that currently have them. Review the summary plan description to determine if the plan has lifetime limits If the plan has limits, they will need to be removed either by the employer or through the collective bargaining process The employer should request data to determine: o How many individuals exceeded the lifetime maximum in the recent past (three to five years)? o What was the total cost in excess of the maximum? ELIMINATE ANNUAL LIMITS ON BENEFITS Summary of Benefit: The elimination of annual limits will be phased out. Effective January 2011, the annual limit must be less than $750,000. Effective January 2012, the annual limit cannot be less than $1,250,000. Effective January 2013, the annual limit cannot be less than $2,000,000. Effective January 2014, the annual limit is eliminated. Obstacles: Eliminating annual limits will add cost to the plans that currently have them.
Review the summary plan description to determine if the plan has annual limits If the plan has limits, they will have to be phased out The employer should request coast data to determine: o How many individuals exceeded the annual limit in the recent past (three to five years)? o What was the total cost in excess of the annual limit? o What percentage of total claims is the amount in excess of the limit? ESSENTIAL HEALTH BENEFITS: Summary of Benefit: All plans must cover essential benefits, including: ambulatory patient services, emergency services, hospitalization, maternity, newborn care, mental health and substance abuse, prescription drugs, rehab services, lab services, pediatric services such as vision and dental, preventative and wellness benefits and chronic disease management. Obstacles: If a plan does not provide these benefits, it will have to offer them. Review the summary plan description to determine if all essential benefits are covered If the plan does not offer all of the listed essential benefits, those benefits must be added by the employer or through the collective bargaining process LIMITS ON FLEXIBLE SPENDING ACCOUNTS (FSAS) Summary of Benefit: Pre-tax contributions will be limited to $2,500 per year effective in 2013 (currently $5,000). This amount will be indexed for inflation in subsequent years. Obstacles: These are use it or lose it health spending accounts. Those with flexible spending accounts should: Request data from the employer on the number of employees enrolled in the FSA and the average and range of contributions to the FSA Work with the employer to educate employees on the change HEALTH SPENDING ACCOUNTS Summary of Benefit: Penalty for use of funds in health spending accounts for other than medical expenses increased from 20 percent to 10 percent.
Obstacles: Health spending accounts are typically used with high deductible health plans. The balance in the account can be carried from one year to the next. If you have a health spending account, you should: Request data from the employer on the number of employees enrolled in the health spending account, how many employees have used funds for non-medical reasons and how much money has been used on average Work with the employer to educate employees on the change RETIREE REINSURANCE PROGRAM Summary of Benefit: Reimburses the plan 80 percent of costs over $15,000 and up to $90,000 for retirees between the ages of 55 and 64. Funds must be used to reduce plan costs. Obstacles: Funds can be used to reduce premiums and out-of-pocket expenses. Reduction in net cost of retiree health plans. Does the employer provide retiree benefits to retirees age 55-64? If yes, you should: Determine if the employer has applied for or been approved for the reinsurance program Determine the employer s estimated reimbursement in its application Determine the net costs of retiree health care by subtracting the estimated reimbursement from the estimated total health care costs MEDICARE PREVENTATIVE COVERAGE Summary of Benefit: Effective January 2011, Medicare will cover preventative care and screenings with no deductibles or copays. Obstacles: This benefit may result in a reduction in cost to the employer retiree health plan. Medicare will no longer charge deductibles or copays to the amounts that may be picked up by the employer plan that may serve as secondary insurance for the retiree. Does the employer offer coverage to Medicare eligible retirees? If yes, you should: Determine if the employer plan wraps around or coordinates with Medicare Request that the employer provide information about use of preventative and screenings for Medicare eligible retirees. Ask for the cost for these deductibles or copays TAX TREATMENT OF MEDICARE PART D SUBSIDY FOR EMPLOYERS
Summary of Benefit: No tax deduction for cost of subsidized drug claims. Obstacles: Under current law, employers can receive a subsidy for providing retiree drug coverage. The subsidy is 28 percent of costs. Employers were able to take a tax deduction for the total costs of the drug plan even though they received a subsidy. The new law removes this benefit. Does the employer receive a subsidy? If yes, you should: Determine the amount of the subsidy Determine the amount of claims paid by retirees for copays, deductibles and coinsurance To determine the net cost of the drug plan, subtract the amount of the subsidy and the amount paid by retirees from the total amount of retiree drug plan costs REPORTING HEALTH INSURANCE COST ON W-2S Summary of Benefit: The employer will be required to report the costs of benefits provided to employees on their W-2s. Obstacles: This requirement is for informational purposes only. The costs of health insurance benefits are not taxable for employees. Determine when the employer will implement this requirement Work with the employer to educate employees on the change and that this will not be taxable EXCISE TAX ON CADILLAC PLANS Summary of Benefit: Effective in 2018, a 40 percent excise tax will be assessed to the cost of a plan in excess of $10,500 for single coverage and $27,500 for family coverage. These thresholds will be indexed. Obstacles: Employers may try to begin to shift the costs to the employees to avoid the tax. Unions may want to consider implementing programs including chronic disease management and other alternatives to prevent the costs from being passed on to employees. Requests current plan costs for both single and family plans. Also ask for projected costs up to and including 2018 Request information on cost containment programs, such as chronic disease management, wellness programs, etc. Analyze data relating to high costs and high usage rates
Employers should be willing to engage in this type of assessment to hold down costs and ensure appropriate care