Health Care Reform Timeline

Part D doughnut hole rebate. In 2010 only, seniors participating in Medicare Part D will receive a $250 rebate when they hit the doughnut hole, or gap in prescription drug coverage that occurs when spending on covered Part D drugs (including copayments and deductibles) exceeds $2,830. The rebate check will be sent to you from Medicare within three months of when you hit the doughnut hole.

Small business tax credit. Find out if your business is eligible for a small business tax credit.

Tax changes for nonprofit Blue Cross and Blue Shield plans. Nonprofit Blue Cross and Blue Shield plans, including HMSA, will continue to be taxed at lower tax rates if they continue to spend at least 85 cents of every dollar of member dues on health care. HMSA has historically far exceeded this limit, spending an average of 93 cents of every dollar to pay for our members’ health care, providing excellent value for our members.

Executive compensation limits. Certain types of compensation paid to employees of health insurers will no longer be eligible for deduction. Starting in 2013, health insurers will not be able to deduct the compensation of their employees who make more than $500,000.

Consumer information grants. The Department of Health and Human Services will provide $30 million in grants to states to set up health plan consumer assistance or health plan ombudsman programs to:

• Assist with complaints and appeals.
• Collect, track and quantify problems and inquiries.
• Educate members on their rights and responsibilities.
• Assist with enrolling members in plans.
• Resolve problems with obtaining subsidies.

Review of member dues increases. The Department of Health and Human Services will review unreasonable increases in member dues for health plans.

Grandfathered plans. Health plans in which an individual is enrolled on March 23, 2010, either as part of a group or as an individual member, are called grandfathered plans. These plans have special effective dates and are exempt from some health care reform requirements. Grandfathered group plans are allowed to enroll new members without jeopardizing their grandfathered status. Individuals in grandfathered plans may also add dependents to their policies. Plans that are created after March 23, 2010, are considered non-grandfathered plans.

Early retiree reimbursement. The federal government will reimburse eligible plans 80 percent of early retiree health claims between $15,000 and $90,000. The program ends on Jan. 1, 2014, or when the $5-billion funding is exhausted, whichever comes first. For more information on this program and how HMSA can help, contact your HMSA account representative.

Department of Health and Human Services Web portal. The federal government will establish a website with information on affordable, comprehensive health care coverage for consumers. The website will offer information for small businesses about health coverage options, including coverage for early retirees, small business tax credits, and how to choose a health plan.

Protection from loss of coverage. HMSA members will not be dropped from coverage retroactively except in cases of fraud, intentional misrepresentation, or failure to timely pay dues.

Primary care provider (PCP). HMSA members will be allowed to choose any participating primary care provider (PCP) who is accepting new patients. The same applies for parents choosing a pediatrician for their child. Women will be allowed access to a participating ob-gyn without a referral.

Extension of dependent coverage. Dependents will be allowed to stay on their parents’ health plan until age 26.

Pre-existing conditions. Starting in September 2010, individuals under the age of 19 will not be denied coverage based on a pre-existing condition. This requirement extends to all individuals starting in 2014.

Preventive care. New health plans will cover preventive health services at no charge.

Regulations on state exchange waivers. The Department of Health and Human Services will consider requests from states to be exempt from some reform provisions, such as an exchange, essential benefits and mandates. States would have to present an alternative plan that would provide coverage that is as comprehensive and affordable to a comparable number of residents as the federal legislation.

Health information technology standards. The Department of Health and Human Services will provide health plans with standards on how to manage data and conduct financial transactions.

Elimination of lifetime limits. For plan years beginning on or after Sept. 23, 2010, plans will not be able to include lifetime limits in their policies for essential health benefits.

Annual limits. For plan years beginning on or after Sept. 23, 2010, the federal government has set restricted annual limits for essential health benefits. The rules will phase out the use of annual dollar limits over the next three years until 2014, when the Affordable Care Act bans them for most plans. Plans issued or renewed beginning Sept. 23, 2010, will be allowed to set annual limits not lower than $750,000. This minimum limit will be raised to $1.25 million beginning Sept. 23, 2011, and to $2 million beginning Sept. 23, 2012.

New appeals process. For plan years beginning on or after Sept. 23, 2010, plans must have a claims and appeals process that is updated regularly with standards established by the Department of Labor. This requirement does not apply to grandfathered plans.

Emergency care. For plan years beginning on or after Sept. 23, 2010, plans must cover emergency care without prior authorization. Copayments and coinsurance for out-of-network providers will be no more than that for in-network providers. However, members may be required to pay the difference between what the out-of-network provider charges and what we are required to pay under federal regulations. This requirement does not apply to grandfathered plans.

Salary nondiscrimination. For plan years beginning on or after Sept. 23, 2010, plans cannot discriminate in favor of highly compensated employees with respect to either eligibility to participate or to benefits. This requirement does not apply to grandfathered plans.

Medical loss ratio (MLR) reporting. Large group plans will be required to spend at least 85 percent of member dues on the health care of members; small group and individual market plans must spend at least 80 percent of dues on the health care of members. Beginning Sept. 23, 2010, health plans will be required to report their MLRs to the federal government.

Medical loss ratio (MLR) rebates. Plans must provide a rebate to members if the percentage of dues that goes to pay for a member’s health care is less than 85 percent in the large group market and 80 percent in the small group and individual markets.

HSA/MSA early withdrawal penalty increase. The penalty for withdrawals from health savings accounts (HSAs) that are not used for qualified medical expenses will increase from 10 percent to 20 percent. The penalty for withdrawals from medical savings accounts (MSAs) will increase from 15 percent to 20 percent.

Doughnut hole phase out. Medicare Part D enrollees who reach the doughnut hole will receive a 50 percent discount on brand-name drugs in the gap as agreed to by pharmaceutical manufacturers. A doughnut hole is a gap in prescription drug coverage that occurs when spending on Part D drugs, including copayments and deductibles, exceeds the initial coverage limit of $2,830 in 2010.

Over time, Medicare will gradually phase in additional subsidies in the coverage gap for brand-name drugs (beginning in 2013) and generic drugs (beginning in 2011). The coinsurance for Part D enrollees in the gap will be reduced from 100 percent to 25 percent by 2020.

Medicare Advantage changes. The coverage for some members with Medicare Advantage plans will stay the same or improve. For others, benefits may be reduced or cost-sharing may increase. HMSA will work to minimize these impacts on our members to ensure that they receive high quality care. Original Medicare benefits will not be reduced.

Medicare Part D. There are currently six classes of drugs that health plans are required to include in Medicare Part D prescription coverage. The Department of Health and Human Services will consider expanding this coverage to include more drugs. Currently, the six protected drug classes are antidepressant, antipsychotic, anticonvulsant, antiretroviral, immunosuppressant, and antineoplastic.

Reimbursement requirements for prescriptions. A physician prescription is required for over-the-counter drugs to be considered eligible for reimbursement for health reimbursement accounts, health savings accounts, or flexible spending accounts.

Simple cafeteria plan. Small businesses may provide tax-free benefits to their employees through a simple cafeteria plan. A cafeteria plan is a health plan maintained by an employer. Employees select from a range of offered benefits and may choose among two or more benefits consisting of cash (a taxable benefit) and qualified nontaxable benefits.

Reporting cost on W-2. Employers must report the aggregate cost of employer-sponsored coverage on an employee’s W-2.

Health plans (non-grandfathered) are required to cover the following preventive health services for women without cost share. These preventive services are in addition to the preventive health services  announced in 2010. Coverage for these services started July 1, 2012.

• Screening for gestational diabetes for pregnant women between 24 and 48 weeks gestation and at first prenatal visit for women at high risk for diabetes.
• High risk human papillomavirus (HPV) DNA testing for women age 30 and older every three years for cervical cancer.
• Annual counseling on sexually transmitted infections (STIs) for all sexually active women regardless of STI risk.
• Annual HIV screening and counseling for all sexually active women.
• Breastfeeding support and counseling, and rental costs for breastfeeding equipment.
• Annual well-woman preventive care visit.
• Annual screening and counseling for interpersonal and domestic violence.
• FDA-approved contraception methods and sterilization procedures as prescribed, along with education and counseling.

Medicare payroll tax increase for high-wage employees. Members earning more than $200,000 and couples earning more than $250,000 will pay 2.35 percent as a Medicare payroll tax on the income above those thresholds. Currently, the rate is 1.45 percent. Individuals and couples at these earning levels will also pay an additional 3.8 percent tax on unearned income, such as interest and dividends from investments.

Cap on salary-reduction contributions to FSAs. Flexible spending account (FSA) contributions are limited to $2,500 per year and adjusted for inflation.

Medicaid eligibility expansion. Medicaid eligibility is expanded to all individuals under age 65 with incomes up to 133 percent of the federal poverty level. States are also required to assist Medicaid-eligible working adults pay for their health plan premiums.

Consumer protections and market reforms. Health plans are required to:

• Accept all applicants, regardless of pre-existing condition and health status.
• Guarantee renewal for members.
• Use adjusted community rating.

Tax on high-cost group health plans (Cadillac tax). A 40-percent excise tax will be imposed on health plans when the annual value of an employee’s health coverage exceeds $10,200 for an individual or $27,500 for a family.

Limits on waiting periods. For plan years beginning on or after Jan. 1, 2014, health plans will not be able to impose waiting periods that exceed 90 days.

Exchange. Small businesses with up to 100 employees will have access to the state-based Small Business Health Options Program (SHOP) exchange. The exchange will include Web portals containing standardized information to help with comparing and purchasing health plans.

Benefit requirements. Plans being offered to the small group market must provide coverage for essential health benefits. This requirement does not apply to grandfathered plans.

Limits on cost-sharing and deductibles. Plans must meet the same cost-sharing requirements as exchange plans, which limit deductibles to $2,000 for individuals and $4,000 for families.

Employer mandates. Employers with more than 50 full-time employees must offer health care coverage to its employees. A full-time employee is defined as an employee who works at least 30 hours per week. Employers with less than 50 employees are exempt from this requirement.

Employers offering coverage. If an employer offers coverage and at least one full-time employee receives a tax credit or cost-sharing subsidy through the exchange (because the offered employer coverage is below 60 percent actuarial value or the employee dues exceed 9.5 percent of household income), the employer pays the lesser of $3,000 for each full-time employee receiving a tax credit or subsidy, or $2,000 per full-time employees. This penalty is calculated monthly.

Employers not offering coverage. If an employer does not offer health care coverage and at least one full-time employee receives a tax credit or cost-sharing subsidy through the exchange, the employer pays a penalty of $2,000 per full-time employee. Employers with 50 or more employees can subtract the first 30 full-time employees from the penalty calculation. The penalty is calculated monthly.

Government reporting. Employers with more than 50 employees who (1) offer health care coverage to employees through an eligible employer-sponsored plan, (2) pay any portion of the costs of such plans, and (3) where the employee’s share of the cost exceeds 8 percent of their wages, must report to the federal government the coverage they offer, the monthly dues of the lowest cost option, and the employer’s share of the cost.

Free-choice vouchers. Employers who offer health care coverage and pay a portion of the plan’s cost must offer free-choice vouchers to qualified employees. Employees can use the vouchers toward the cost of exchange-provided coverage. For more information, please contact your HMSA account representative.

Automatic enrollment. Employers with more than 200 employees will have to automatically enroll employees into their health plans. Employees may opt out of the coverage.

Exchange. Employers with more than 100 employees will have access to the state-based Small Business Health Options Program (SHOP) exchange. The exchange will include Web portals with standardized information to help when comparing and purchasing health plans.