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Grandfathered vs. Non-Grandfathered Plans If your insurance plan existed on March 23, 2010, and did not make changes to benefits and cost-sharing arrangements beyond routine changes under certain thresholds, your plan may be grandfathered. The PPACA has established several provisions that must be adhered to, but not all of these provisions apply to grandfathered group plans. Plans will lose their grandfathered status if they choose to significantly cut benefits or increase out-of-pocket spending for consumers - and consumers in plans that make such changes will gain new consumer protections.
Adult Dependent Coverage Young adults will be allowed to stay on their parents’ plan until they turn 26 years old (in the case of existing group health plans, this right does not apply if the young adult is offered insurance at work). This change is in effect for both grandfathered and non-grandfathered plans.
Free Preventive Care Implementation: Effective for plan years beginning on or after Sept. 23, 2010 All new plans must cover certain preventive services such as well-being visits, mammograms and colonoscopies without charging a deductible, co-pay or coinsurance. This change only applies to non-grandfathered plans.
Coverage of Children with Pre-Existing Conditions Implementation: Effective for plan years beginning on or after Sept. 23, 2010 The health care law includes new rules that provide coverage to children under the age of 19 regardless of pre-existing conditions. This change applies to all plans except grandfathered individual market plans.
Elimination of Lifetime Limits on Insurance Coverage Implementation: Effective for plan years beginning on or after Sept. 23, 2010 Under the law, insurance companies can no longer impose lifetime dollar limits on essential benefits, like hospital stays. This change applies to all plans except grandfathered individual market plans.
Small Business Health Insurance Tax Credits Implementation: Jan. 1, 2010 Small businesses are eligible for tax credits to help them provide insurance benefits to their workers. The first phase of this provision provides a credit worth up to 35 percent of the employer’s contribution to the employees’ health insurance. Small non-profit organizations may receive up to a 25 percent credit. The second phase of small business tax credits will be implemented on Jan. 1, 2014.
Review of Health Insurance Plan Increases Implementation: Jan. 1, 2010 The federal government, in conjunction with the states, will create a process to ensure that large insurance rate increases are thoroughly reviewed. The regulation will require (began in 2011) that all insurers seeking rate increases of 10% or more in the individual and small group market publicly disclose the proposed increases and the justification for them. Under the proposed regulation, states with effective rate review systems would conduct the reviews. If a state lacks the resources or authority to do thorough actuarial reviews, the Department of Health and Human Services will facilitate them.
Medical Loss Ratio Implementation: Jan. 1, 2011 At least 85 percent of all premium dollars collected by insurance companies for large employer plans must be spent on health care services and health care quality improvement. For plans sold to individuals and small employers, at least 80 percent of the premium must be spent on benefits and quality improvement. If insurance companies do not meet these goals, because their administrative costs or profits are too high, they must provide rebates to consumers.
See Wellmark’s spending per premium dollar
Flexible Spending Account Changes Implementation: Jan. 1, 2011 Healthcare spending accounts (HSAs), flexible spending accounts (FSAs), Health Reimbursement Accounts (HRAs), or Medical Savings Accounts (MSAs) can no longer be used to purchase over-the-counter (OTC) drugs and medications unless prescribed by a doctor (effective for expenses incurred after December 31, 2010). In addition, the HSA penalty was increased from 10% to 20%, plus income tax for non-qualified distributions. (IRS Bulletin 2012-26, Notice 2012-40)
Coverage of Women’s Preventive Services Implementation: Aug. 1, 2012 Non-grandfathered plans that are effective or renewed on or after August 1, 2012, must include 100 percent coverage for women’s preventive services when performed by an in-network physician. Coverage includes services like prenatal visits, FDA-approved contraceptives, mammograms and pap smears.
Summary of Benefits and Coverage Implementation: Effective in the individual market Sept.23, 2012. Effective in the group market during the first open enrollment period or plan year occurring on or after Sept. 23, 2012. Insurers and/or group health plans must provide a summary of benefits and coverage (SBC) document to enrollees/potential enrollees at specific times (upon application, by the first day of coverage, following a special enrollment, upon renewal and upon request.) The new rules also require 60-days-prior-notice to enrollees and beneficiaries when a group health plan sponsor or issuer modifies the terms of coverage, and the change impacts a previously issued SBC.
Learn more about SBCs.
W-2 Reporting Implementation: Covers employee 2012 W-2 form – provided to employees in Jan. 2013 Employer-sponsored groups that file 250 or more W-2 forms must report on employees’ 2012 W-2 forms – to be issued in January 2013 – the total cost of their 2012 employer-sponsored coverage on their W-2 forms.
Learn more about W-2 reporting
The Patient-Centered Outcomes Research Fee Implementation: Oct. 1, 2012 Health insurance issuers and sponsors of self-funded group health plans will be assessed an annual fee to fund patient-centered outcomes research. The fee is imposed for a limited number of years, beginning in 2012 and ending in 2019. The trust funds the Patient-Centered Outcomes Research Institute, which finances efforts to find medical treatments that are more effective and cost efficient.
Self-funded plan sponsors and providers of fully-insured plans are required to pay $1 per member, per year for the time period Oct. 1, 2012 through Sept. 30, 2013; for plan years of Oct. 1, 2013 through Sept. 30, 2014, the fee is $2 per member per year. The fee may then be adjusted for plan years through 2019.
Medical Flexible Spending Account Maximum Decreased Implementation: Jan. 1, 2013 The maximum contributions to a medical flexible savings account will be decreased from its previous $5,000 limit to $2,500 per year. Future adjustments to the limit will be based on the Consumer Price Index. (IRS Bulletin 2012-26, 2012-40)
W-2 Reporting Implementation: Jan. 1, 2013 Employees will begin to see the total cost of their 2012 employer-sponsored coverage on their W-2 forms (for the tax year 2012) in January 2013. This requirement only applies to employer-sponsored groups that file 250 or more W-2 forms per year.
Learn more about W-2 reporting
Elimination of Retiree Prescription Drug Tax Deduction Implementation: Jan. 1, 2013 Beginning Jan. 1, 2013, the amount of the deduction for retiree prescription drug costs will be reduced by the amount of the excludable subsidy payments received. Currently, sponsors of qualified retiree prescription drug plans are eligible for subsidy payments for a portion of each qualified covered retiree’s gross covered prescription drug costs. These are excludable from the taxpayer’s (plan sponsor’s) gross income for regular income tax and alternative minimum tax purposes. For tax years beginning before 2013, a taxpayer may claim a business deduction for covered retiree prescription drug expenses even though it excludes qualified retiree prescription drug plan subsidies allocable to those expenses. This change is in effect for both grandfathered and non-grandfathered plans.
Employer Notice of Exchanges Implementation: March 1, 2013 Beginning March 1, 2013, employers must provide all employees and new hires with a written notice of the availability of the health insurance exchange. (link to ‘health insurance exchanges below) The notice will inform employees of the existence of the exchange, describe the services provided by the exchange and inform employees that they may be eligible for a premium tax credit or a cost-sharing reduction through the exchange in certain circumstances.
Open Enrollment for Health Insurance Exchanges Implementation: Fall 2013 Beginning in the Fall of 2013, open enrollment will begin for the new health insurance exchanges (link to ‘health insurance exchanges’ again)
Increase to Patient-Centered Outcomes Research Fee Implementation: Oct. 1, 2013 Since Oct. 1, 2012, health insurance issuers and sponsors of self-funded group health plans have been assessed an annual fee to fund patient-centered outcomes research. The fee is imposed for a limited number of years (beginning in 2012 and ending in 2019) and funds the Patient-Centered Outcomes Research Institute, which finances efforts to find medical treatments that are more effective and cost efficient.
Beginning Oct. 1, 2013, self-funded plan sponsors and providers of fully-insured plans are required to pay $2 per member, per year for the time period Oct. 1, 2013 through Sept. 30, 2014 (the previous year’s fee was $1 per member, per year)
Navigators Implementation: Date TBD, 2013 Navigators are non-profit, grant-funded entities that will provide consumer education and advice about the public health insurance exchange. Specifically, they will provide outreach to underserved populations, help individuals with enrollment on the exchange, assist with questions about tax credits and answer grievances or complaints. Navigators will not be allowed to sell health insurance plans. They may be compensated by the exchange, but not by insurance carriers. States will have the flexibility to further determine the role of navigators.
Minimal Essential Coverage Implementation: Jan. 1, 2014 Minimal Essential Coverage (also referred to as the ‘individual mandate’) will require consumers to have acceptable, basic health insurance coverage or pay a penalty of $95 in 2014, $325 in 2015, $695 (or up to 2.5 percent of income) in 2016. Families will pay half the amount for children, up to a cap of $2,250 per family. After 2016, penalties are indexed to the Consumer Price Index. Tax credits and subsidies will be available for low income individuals and families.
Guaranteed Issue Implementation: Jan. 1, 2014 The law will require insurance companies to accept all individuals that apply for coverage regardless of health status or pre-existing conditions. Rating variation will be allowed based on age, geographic area, family composition, and tobacco use in the individual, small group market and Exchanges.
Health Insurance Exchanges Implementation: Jan. 1, 2014 (Open enrollment will be October 2013) A health insurance exchange is a new retail-like marketplace that offers health insurance and coverage options to individuals and small employers. Exchanges will offer consumers a choice of health plans that meet certain benefits and cost standards.
Starting in 2014, if you are seeking individual coverage or if your employer doesn’t offer insurance, you will be able to buy it directly in an American Health Benefits Exchange or Small Business Health Options Program (SHOP) Exchange where individuals and small businesses can purchase qualified coverage.
New Premium Calculations Implementation: Jan. 1, 2014 For non-grandfathered plans, (link to ‘grandfathered plans’ listed in 2010) individual plans premiums may only vary by: Age (3:1 maximum), Tobacco use (1.5:1 maximum), Geographic rating area or Type of Coverage (individual or family.)
Tax Credits and Subsidies Implementation: Jan. 1, 2014 Premium tax credits and cost-share subsidies are available for low income individuals and families. Individuals and families with incomes between 100-400 percent of the Federal Poverty Level (FPL) can receive a premium tax credit through the public exchange to offset their health insurance premium. Additionally, individuals and families with incomes below 250 percent of the Federal Poverty Level (FPL) can also receive a cost-share subsidy through the public exchange that will decrease copayments, coinsurance, and deductible amounts.
The tax credits and cost-share reductions are only available if: The individual or family is not eligible for government sponsored coverage (e.g. Medicaid);
Small Business Tax Credit Increase Implementation: Jan. 1, 2014 The law implements the second phase of the small business tax credit for qualified small businesses and small non-profit organizations. In this phase, the credit is up to 50 pecent of the employer’s contribution to provide health insurance for employees. There is also up to a 35 percent credit for small, non-profit organizations.
Young Adult Coverage Implementation: Jan. 1, 2014 If your plan covers children, you can now add or keep your children on your health insurance policy until they turn 26 years old. The provision applies to children who are married, not living with you, attending school, not financially dependent or who are eligible to enroll in their employer’s plan. There is one temporary exception – Until 2014, grandfathered group plans do not have to offer dependent coverage up to age 26 if a young adult is eligible for group coverage outside of their parent’s plan.
Essential Health Benefits Package Implementation: Jan. 1, 2014 The law requires that all non-grandfathered individual and small group health insurance plans sold in a state, including those offered through an Exchange, must provide the essential health benefits (EHBs) package, which places requirements on cost-share, actuarial value, and covered services.
This change is in effect for non-grandfathered individual and small group plans.
Eliminating Annual Limits on Insurance Coverage Implementation: Jan. 1, 2014 The law prohibits new plans and existing group plans from imposing annual dollar limits on the amount of coverage an individual may receive.
Coverage for Individuals Participating in Clinical Trials Implementation: Jan. 1, 2014 Insurers will be prohibited from dropping or limiting coverage because an individual chooses to participate in a clinical trial (applies to all clinical trials that treat cancer or other life-threatening diseases.) This change only applies to non-grandfathered plans.
Employer Shared Responsibility (Penalties) Implementation: Jan. 1, 2014 Employers of more than 50 full-time equivalent (FTE) employees will face an assessment if a full-time employee receives a premium tax credit through the public health insurance exchange. An employee may be eligible to receive a premium tax credit if:
Risk Mitigation Programs Implementation: Jan. 1, 2014 Risk Mitigation programs will be developed to help level the playing field for all health plans in the new exchange environment. The programs include:
Annual Fees Implementation: Jan. 1, 2014 To help finance the PPACA, the government will collect annual fees from the prescription drug industry, insurance industry and on medical devices.
Pre-Existing Conditions Implementation: Plan years beginning on or after Jan. 1, 2014 No one will be denied coverage due to pre-existing conditions. For individuals and small group markets, insurance companies will no longer be able to charge higher rates due to gender or health status.
90-Day Waiting Period Implementation: Plan years beginning on or after Jan. 1, 2014 The health care law states that waiting periods for coverage that are greater than 90 days cannot be applied by group health plans or insurers offering group coverage.
Minimal Essential Coverage Tax Increase Implementation: Jan. 1, 2015 Maximum tax penalty for not having insurance rises to $325 a year, or 2 percent of taxable income. Learn more about the Individual Mandate.
Employer IRS Reporting Implementation: Jan. 1, 2015 (for tax year 2014) Large employers (including self-insured employers) will be required to report information about the coverage they offer to full-time employees to the Internal Revenue Service (IRS) as well as to each individual employee enrolled in the employer’s plan. Health insurers will report this information to the IRS for employers who offer fully insured plans.
Auto enrollment Implementation: Jan. 1, 2015 Employers with more than 200 full-time employees will be required to automatically enroll full-time employees in the employer’s health plan, subject to waiting periods authorized by law.
Minimal Essential Coverage Tax Increase Implementation: Jan. 1, 2016 Maximum tax penalty for not having insurance rises to $695 a year, or 2.5 percent of taxable income. After 2016, penalties are indexed to the Consumer Price Index. Learn more about the Individual Mandate. (link to ‘2014 Individual Mandate’)
There are currently no new provisions scheduled for this year.
Excise Tax Implementation: Jan. 1, 2018 A 40 percent excise tax (also referred to as the ‘cadillac tax’)will be imposed on high-cost, employer-provided health plans beyond $27,500 for family coverage and $10,200 for single coverage; it will increase to $30,950 for families and $11,850 for individuals, retirees and employees in high-risk professions. This change is in effect for grandfathered and non-grandfathered, employer-sponsored, plans.
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