HHS Releases Final Medical Loss Ratio Regulations

The Obama administration today issued the final regulations on the much-discussed medical loss ratio — the proportion of premium dollars health insurers spend on patient care, compared to administrative expenses.

The health-care overhaul bill stipulates targets of 80% for small-business plans and 85% for large-company plans, but the industry had lobbied to make it easier in various ways for insurers to hit those benchmarks. (If they don’t, they’ll have to pay rebates to policyholders.)

But there weren’t any surprises, as the regs weren’t changed from those recommended by the National Association of Insurance Commissioners last month. One of the proposed amendments that didn’t make the NAIC’s final recommendations was a proposal to remove insurance-broker commissions from the administrative-cost bucket. But the NAIC said the health-care law made it pretty clear that those costs were intended to be classified as administrative, and so it skipped a vote on the amendment and instead created a subgroup to work with HHS on the issue.

Here are some additional articles on the issue:

HHS Release

Kaiser Health News

Grandfathered Health Plans Can Change Insurers

WASHINGTON—Employers are allowed to change insurers without their health care plans automatically losing grandfathered status under the health care reform law, federal regulators said Monday.

In a reversal of their previous position, the Departments of Labor, Treasury and Health and Human Services said forcing an employer to stay with an insurer to keep a health plan’s grandfathered status would give that insurer an unfair advantage.

“If an employer has to stay with the same insurance company to keep the benefits of having a grandfathered plan, the insurance company has undue and unfair leverage in negotiating the price of coverage renewals,” according to an HHS fact sheet.

In addition, “allowing employers to shop around can help keep costs down while ensuring individuals can keep the coverage they have,” HHS said.

Like the original rule, self-funded employers also will be able to change plan administrators without losing grandfathered status for their plans.

Grandfathered plans are shielded from certain health care reform law requirements, such as providing full coverage of preventive services.

The agencies noted that they received many comments on the initial rule that would have stripped grandfathered status for plans that changed insurers. The change in position was in response to those comments, HHS said.

Monday’s action came after federal regulators signaled in September that they intended to modify the original rule

To view the full article click here

Additonal Guidance on Grandfathered Plans Released

The U.S. government recently released several additional FAQs clarifying grandfathered status regulations for existing health plans that are hoping to avoid compliance with certain reform provisions next year.

The guidance confirms that the six conditions outlined in the interim final regulations released in June are the only conditions that plans must comply with to attain grandfathered status. If all of these conditions are met, existing health plans are exempt from certain provisions of the health care reform laws, such as providing free preventive care services and an external review process for appeals.

Those conditions are as follows:
• Benefits may not be substantially reduced or eliminated from the plan.
• Co-insurance cost-sharing percentages cannot be significantly increased.
• The deductible or out-of-pocket maximum must not increase by an amount exceeding 15 percent more than medical inflation.
• The copayment listed under the plan may not increase by an amount exceeding 15 percent or $5 more than medical inflation (the greater of the two options).
• The employer’s contribution to the plan’s cost cannot decrease by more than 5 percent.
• The insurer cannot impose annual and/or lifetime limits below a certain amount.

The guidance reiterates that grandfathered status will be determined on a singular basis; an employer might have one grandfathered benefits package that is exempt from those specific provisions, and another that is not grandfathered and subject to all provisions.
It also explores the effect that wellness program changes will have on grandfathered status. The guidance states that offering incentives such as premium discounts to wellness program participants will be permitted, but imposing penalties such as cost-sharing surcharges may violate the terms of maintaining grandfathered status.

There has been speculation that the administration may alter the regulations released in June to make it easier for employers to maintain grandfathered status. Currently, the regulations state that employers seeking grandfathered status for their plans cannot enter into a “new policy, certificate, or contract of insurance” after March 23, 2010, suggesting that changing carriers would eliminate the plan from grandfathered status even if benefits remain the same. This regulation may be adjusted in the near future to allow for carrier changes as long as the plan’s benefits remain relatively similar.

To read the FAQs in their entirety, click here.

IRS Delays Mandatory W-2 Reporting of Health Care Coverage Costs

On Tuesday October 12th, the IRS issued a notice providing interim relief to employers regarding reporting the costs of group health plan coverage to employees (Notice 2010-69). Under the notice, notification to employees on Form W-2 will not be required for 2011. The IRS also posted a draft 2011 Form W-2 on its site.

The health care reform legislation enacted in March requires employers to include the aggregate cost of applicable employer-sponsored health care coverage on employees’ W-2s for tax years starting on or after Jan. 1, 2011 (new IRC § 6051(a)(14)). The IRS decided that employers need additional time to make changes to their payroll systems and procedures to comply with this rule. Therefore, the notice says the reporting requirement will not be mandatory for W-2s issued for 2011 and employers will not be subject to penalties for failure to meet the requirements of section 6051(a)(14) for 2011 tax years.

Employers who choose to report 2011 health care coverage costs to their employees will do so in Box 12 using the code “DD.” The IRS anticipates issuing guidance on the reporting requirement before the end of the year.

To read the full article click here

Health Care Reform: Tips for Open Enrollment

The first round of health care reform changes under the Patient Protection and Affordable Care Act of 2010 ("PPACA") goes into effect January 1, 2011 for calendar year group health plans. It's now crunch time for employers pulling together their open enrollment materials for 2011.

Click here to read more.

Judge Sets Hearing on Suit Challenging Health Reforms

PENSACOLA, Fla. (Reuters)—A Florida judge said Tuesday he would hear arguments Dec. 16 on a lawsuit by 20 U.S. states seeking to block President Barack Obama's overhaul of the U.S. health care system.

U.S. District Judge Roger Vinson, who is weighing a motion by the Justice Department to dismiss the lawsuit, ordered the follow-up hearing on the lawsuit led by Florida and involving 19 other states, which was originally filed in March by mostly Republican state attorneys general.
Judge Vinson said he would formally rule on the dismissal motion by Oct. 14, but Florida Attorney General Bill McCollum said the judge had already strongly indicated that the case would not be dismissed.

"The judge's apparent decision today means we will proceed," Mr. McCollum told reporters.
He was referring to what transpired during nearly two hours of arguments in Vinson's Pensacola courtroom Tuesday. During the hearing, the judge said he would likely reject "at least one" of the government's motions for dismissal of the case, but he did not elaborate.
An adverse ruling on the dismissal would be a setback for the White House, forcing it to defend its reforms in the middle of a tough campaign before the November midterm congressional elections.

The lawsuit claims the sweeping reform of the $2.5 trillion U.S. health care system, pushed through by President Obama's fellow Democrats in Congress after months of bitter partisan wrangling, violates state government rights in the Constitution and will force massive new spending on hard-pressed state governments.
The new health care law is a cornerstone of President Obama's domestic agenda and aims to expand health insurance for millions more Americans while curbing costs. Obama officials have insisted it is constitutional and is necessary to stem huge projected increases in health care expenses.

To view the full article click here

Guidance Issued on 2011 FSA / HSA Changes

The Patient Protection and Affordable Care Act (PPACA) changed the requirements related to reimbursements for over-the-counter (OTC) drugs. These changes affect health FSAs, HRAs, HSAs and Archer MSAs, which will need a prescription to reimburse the costs of OTC drugs purchased after December 31, 2010.

On September 3, 2010, the IRS released IRS Notice 2010-59, which provides additional information on this requirement. The notice states:

· Reimbursement is restricted to prescribed drugs, insulin and OTC drugs that have a
prescription;

· Health FSA and HRA debit cards cannot be used for OTC drugs, except as provided in the notice; and

· Required cafeteria plan amendments must be adopted by June 30, 2011 and can be retroactively effective.

See www.ecfc.org/files/legislative-news/n-10-59.pdf for a copy of the Notice.

IRS NOTICE 2010-59

General Rule

The Notice provides guidance on Section 9003 of PPACA, which revises the definition of “medical expenses” for employer-provided accident and health plans, including health flexible spending arrangements (health FSAs) and health reimbursement arrangements (HRAs). PPACA Section 9003 also revises the definition of “qualified medical expenses” for health savings accounts (HSAs) and Archer medical savings accounts (Archer MSAs). Section 9003 applies after December 31, 2010.

Under these rules, tax-free payment or reimbursement is only available after December 31, 2010, for expenses incurred for a medicine or drug if the medicine or drug is a prescribed drug (determined without regard to whether the drug is available without a prescription) or is insulin. This means that these expenses may be paid or reimbursed by an employer-provided plan (including a health FSA or HRA) or reimbursed tax-free by an HSA or Archer MSA if the medicine or drug:

· Requires a prescription;
· Is an OTC medicine or drug and the individual obtains a prescription; OR
· Is insulin.

Note that expenses incurred for OTC medicines or drugs purchased without a prescription before January 1, 2011, may be reimbursed tax-free at any time, pursuant to the terms of the plan.

What Is a Prescription?

For purposes of these rules, the Notice clarifies that a prescription means a written or electronic order for a medicine or drug that meets the legal requirements of a prescription in the state in which the medical expense is incurred and that is issued by an individual who is legally authorized to issue a prescription in that state.

What About Other OTC Items?

The Notice makes clear that the requirement to get a prescription does not apply to OTC items that are not medicines or drugs, including equipment such as crutches, supplies such as bandages, and diagnostic devices such as blood sugar test kits. These items can qualify for medical care if they otherwise meet the tax code’s definition of medical care, which includes expenses for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body. However, expense for items that are merely beneficial to the general health of an individual, such as an expenditure for a vacation, are not expenses for medical care.

Rules for Debit Cards

In most cases, health FSA and HRA debit cards will not be able to be used to purchase OTC medicines or drugs, effective January 1, 2011. This is because current debit card systems are not capable of recognizing and substantiating that the OTC medicine or drug were prescribed. However, see below for an exception for purchases at certain pharmacies. Also, debit cards may continue to be used for medical expenses other than OTC medicines or drugs.

In order to facilitate the significant changes to existing systems necessary to reflect the new rules, the IRS will not challenge the use of debit cards for expenses incurred through January 15, 2011, as long as the use follows existing rules. However, on and after January 16, 2011, OTC medicine or drug purchases at all providers and merchants must be substantiated before reimbursement may be made. This is the case even if the provider or merchant has an inventory information approval system (IIAS). Substantiation is accomplished by submitting the prescription (or a copy of the prescription or other documentation that a prescription has been issued) for the OTC medicine or drug and other information from an independent third party that satisfies existing requirements.

The Notice gives examples of documentation that would satisfy the substantiation requirements for OTC medicines or drugs:

· A customer receipt issued by a pharmacy which identifies the name of the purchaser (or the name of the person for whom the prescription applies), the date and amount of the purchase and an Rx number.

· A similar receipt without an Rx number that is accompanied by a copy of the related prescription.

As noted above, there is an exception to the restrictions on debit card use for certain pharmacies. Prior IRS guidance (Notice 2007-2) provides that health FSA and HRA debit cards may be used at a pharmacy that does not have an IIAS if 90 percent of the store’s gross receipts during the prior taxable year consists of items which qualify as expenses for medical care under Internal Revenue Code Section 213(d). The Notice states that, until further guidance is issued, debit cards may be used at a pharmacy that satisfies the 90-percent test to purchase OTC medicines or drugs that have been prescribed, provided that substantiation is properly submitted in accordance with the terms of the plan. The prescription (or a copy of the prescription or other documentation that a prescription has been issued) and other information from an independent third party must be included. For the purpose of determining whether a pharmacy meets the 90-percent test, sales of OTC medicines and drugs at the pharmacy may continue to be taken into account after December 31, 2010.

Transition Rule for Cafeteria Plans

Cafeteria plans may need to be amended to follow the new requirements for OTC medicines and drugs. In general cafeteria plan amendments may be effective only prospectively. However, the Notice states that, notwithstanding the general rule against retroactive amendments, an amendment to conform to the cafeteria plan to the new OTC drug requirements that is adopted no later than June 30, 2011, may be made effective retroactively for expenses occurred after December 31, 2010 (or after January 15, 2011 for health FSA and HRA debit card purchases).

Effective Dates

For expenses incurred after December 31, 2010, payments or reimbursements for medicines or drugs from an employer-provided accident and health plan, including a health FSA or HRA, are restricted to prescribed drugs, insulin, and OTC drugs that are prescribed.

This effective date applies regardless of whether the plan year for the employer’s plan is a fiscal or calendar year or whether there is no plan year (or other coverage period in the case of an HRA), and regardless of any applicable grace period for a health FSA.
Tax-free distributions for qualified medical expenses from an HSA or Archer MSA for medicines or drugs purchased after December 31, 2010, are restricted to prescribed drugs, insulin and OTC medicines or drugs that are prescribed.

First Round of Approved Applications for Early Retiree Reinsurance Program Released

The Department of Health & Human Services has released the first round of nearly 2000 applications that have been approved for reimbursement through the Early Retiree Reimbursement Program (ERRP).


To search the list click here



To learn more about the ERRP click here

Additional Clarification on New Appeals Process Requirements

WASHINGTON—Interim final rules describing the appeals process and external claims review that non-grandfathered self-insured group health plans must follow under the health care reform law have been issued by the Departments of Labor, Health and Human Services and the Internal Revenue Service.

The rules clarify certain issues that were not addressed in previous regulations.

The Patient Protection and Affordable Care Act mandates that employees in self-funded health plans be able to request a “federal external review” of coverage if a claim or benefit is denied through internal reviews conducted by employers and plan administrators.

Under the interim final rules, which were issued Monday and apply to plan years beginning on or after Sept. 23, 2010, a group health plan must give claimants up to four months to request an external review after an adverse claim or benefit decision. A preliminary review of that request must be conducted within five business days of the receipt of that request, and the plan must issue a written notification to the claimant within one business day after the preliminary review has been completed.

If the preliminary review finds the need for an external review, the request must be referred to an independent review organization accredited by URAC or a similar nationally recognized accrediting organization. To ensure there is no bias in the external review process, benefit plans are required to contract with at least three of these independent review organizations and rotate claims assignments among them. In addition, the review organizations cannot be eligible for any financial incentives based on the likelihood that they would support denial of benefits.

An expedited external review process is prescribed for situations requiring immediate medical care, including urgent care and for those in which denial of payment for treatment would jeopardize the claimant's ability to regain maximum function.

The interim final rules also outline specific requirements that group benefit plans must include in their contracts with independent review organizations, as well as the type of information and documents that the review organizations must consider in making decisions.

To view the full article click here.

Guidance Provided Regarding Health Care Reform's New Appeal Requirements

Regulations issued by the Departments of Health and Human Services, Labor, and the Treasury will standardize both an internal process and an external process that patients can use to appeal decisions made by their health plan. The rules issued on July 23, 2010 will provide uniformity to the existing patchwork of protections that apply to only some plans in some States, and simplify the system for consumers.



It appears that the bulk of responsibility for implementation for these processes' will fall on the shoulders of the insurance companies and the states. Employers will need to ensure that their employees are aware of these avenues of appeals.



Below is an excerpt from the fact sheet released by the Department of Health & Human Services:


The new rules issued by the Departments of Health and Human Services, Labor, and the Treasury will standardize both an internal process and an external process that patients can use to appeal decisions made by their health plan.


Today, if your health plan tells you it won’t cover a treatment your doctor recommends, or it refuses to pay the bill for your child’s last trip to the emergency room, you may not know where to turn. Most health plans have a process that lets you appeal the decision within the plan through an "internal appeal" – but depending on your State’s laws and your type of coverage, there’s no guarantee that the process will be swift and objective. Moreover, if you lose your internal appeal, you may not be able to ask for an "external appeal" to an independent reviewer.


The rules issued today will end the patchwork of protections that apply to only some plans in some States, and simplify the system for consumers. And they will ensure that all consumers in new health plans have access to internal and external appeals processes that are clearly defined, impartial, and designed to ensure that, when health care is needed and covered, consumers get it.


Internal Appeals:


The internal appeals process will guarantee a venue where consumers may present information their health plan might not have been aware of, giving families a straightforward way to clear up misunderstandings. Under the new rules, new health plans beginning on or after September 23, 2010 must have an internal appeals process that:
 Allows consumers to appeal when a health plan denies a claim for a covered service or
rescinds coverage;

 Gives consumers detailed information about the grounds for the denial of claims or coverage;  Requires plans to notify consumers about their right to appeal and instructs them on how to
begin the appeals process;

 Ensures a full and fair review of the denial; and

 Provides consumers with an expedited appeals process in urgent cases.


External Appeals:


If a patient’s internal appeal is denied, patients in new plans will have the right to appeal all denied claims to an independent reviewer not employed by their health plan. External appeals have helped consumers get the care they deserve: one study found that – in States that had external appeals – consumers won their external appeal against the insurance company 45% of the time.
While 44 States provide for some form of external appeal, the laws governing these processes vary greatly and fail to cover millions of Americans. The new rules will ensure that consumers with new health coverage in all States have access to a standard external appeals process that meets high standards for full and fair review.

These standards were established by the National Association of Insurance Commissioners (NAIC). States are encouraged to make changes in their external appeals laws to adopt these standards before July 1, 2011. The NAIC standards call for:
 External review of plan decisions to deny coverage for care based on medical necessity, appropriateness, health care setting, level of care, or effectiveness of a covered benefit.

 Clear information for consumers about their right to both internal and external appeals –
both in the standard plan materials, and at the time the company denies a claim.

 Expedited access to external review in some cases – including emergency situations, or cases where their health plan did not follow the rules in the internal appeal.

 Health plans must pay the cost of the external appeal under State law, and States may not require consumers to pay more than a nominal fee.
 Review by an independent body assigned by the State. The State must also ensure that the reviewers meet certain standards, keep written records, and are not affected by conflicts of interest.
 Emergency processes for urgent claims, and a process for experimental or investigational treatment.

 Final decisions must be binding so, if the consumer wins, the health plan is expected to pay for the benefit that was previously denied.


If State laws don’t meet these standards, consumers in those States will be protected by comparable Federal external appeals standards. In addition, people in health plans that are not subject to State law – including new self-insured employer plans – will be protected by the new Federal standards.

COBRA Subsidy Not Mentioned in Bill

Members of the Senate have voted 60-40 to let an unemployment benefits extension bill that says nothing about the COBRA health benefits subsidy extension come up for a vote.

The House already has approved a version of the bill, H.R. 4213, Promoting American Jobs, Closing Tax Loopholes and Preventing Outsourcing Act, in December 2009.

The Senate could vote on final passage of its version of the bill by 9 p.m. Wednesday, according to the Senate floor calendar.

Back in February, when Sen. Max Baucus, D-Mont., the chairman of the Senate Finance Committee, and Sen. Charles Grassley, R-Iowa, the highest ranking Republican on the committee, introduced a version of the bill that became H.R. 4213, the the bill included a provision that would have extended the 65% federal COBRA health benefits extension.

Health Reform Rules Clarify Preventative Cost-Sharing

Health care reform regulations issued on Wednesday clarify that employers and insurance companies will be able to continue to impose cost-sharing requirements on preventative services employees receive from out of network providers.

There were questions throughout the industry if reform would require 100% coverage of both in and out of network preventative services, removing any incentive for employees to go in network for their routine preventative care.

Grandfathered plans are exempt from the requirement to cover preventative services at 100% with no cost-sharing.

To read the full article click here: http://www.businessinsurance.com/apps/pbcs.dll/article?AID=/20100714/NEWS/100719961/1287

DOL Issues Mental Health Parity Implementation Clarification

The Department of Labor (DOL) issued an important clarification to the mental health parity regulations strongly advocated for by many in the industry that will provide the critical flexibility needed to avoid making major changes in benefits or cost-sharing to comply with the interim final regulations.

The clarification, issued today in the form of a DOL "Frequently Asked Question" (FAQ), should permit plans to divide the outpatient classification established by the parity regulation into professional and non-professional services which will solve the most urgent “testing” issue identified by plans.Problems with the way the regulations were drafted would have required insurers to make changes that either would have increased premiums significantly or required major benefit restructuring. In addition, these changes could have caused a loss of grandfather status.
The welcome clarification impacts the scheduled compliance of the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) Interim Final Regulations for new and renewing groups as of July 1, 2010.

Early Retiree Reinsurance Program Begins Receiving Applications Today

Today, employers can begin submitting applications for the Early Retiree Reinsurance Program. Created by the Affordable Care Act, this program provides $5 billion in financial assistance to employers, unions and state and local governments to help them maintain coverage for early retirees age 55 and older who are not yet eligible for Medicare. The program will reimburse up to 80% of claims incurred between $15,000 and $90,000 for each eligible member. The reimbursement is on a first come / first serve basis and once the $5 billion is depleted the program will end. If funds are not depleted on January 1, 2014 the program will end at that time.

To view the press release click here: http://www.hhs.gov/news/press/2010pres/06/20100629a.html

To view the fact sheet click here: http://www.healthreform.gov/newsroom/early_retiree_reinsurance_program.html

To view FAQ's, download the application and for additional information click here: http://www.hhs.gov/ociio/regulations/index.html#early_retiree

COBRA Subsidy Extension Receives Another Setback

WASHINGTON—Senate Democratic leaders on Thursday failed once again to win enough support to stop debate and bring to a floor vote a tax extenders bill, delivering another blow to backers on extending federal COBRA premium subsidies.

To read the full story click here:
http://www.businessinsurance.com/apps/pbcs.dll/article?AID=/20100625/NEWS/100629937

President Obama Lays Out "New Patient Bill of Rights"

Today, the Departments of Health and Human Services (HHS), Labor, and Treasury issued regulations to implement a new Patient’s Bill of Rights under the Affordable Care Act – which they say will help children (and eventually all Americans) with pre-existing conditions gain coverage and keep it, protect all Americans’ choice of doctors and end lifetime limits on the care consumers may receive.

Employers shouldn't fear that these items are a new revelation of health care regulations. They are simply a packaging of items that were already laid out in the reform legislation. For additional details click http://www.healthreform.gov/newsroom/new_patients_bill_of_rights.html

HHS Issues Regulations on Grandfathering

The HHS just released interim final rules regarding the "Grandfather" status of plans that were in effect on 3/23/10:

Grandfathered health plans will be able to make routine changes to their policies and maintain their status. These routine changes include cost adjustments to keep pace with medical inflation, adding new benefits, making modest adjustments to existing benefits, voluntarily adopting new consumer protections under the new law, or making changes to comply with State or other Federal laws. Premium changes are not taken into account when determining whether or not a plan is grandfathered.

Plans will lose their grandfathered status if they choose to make significant changes that reduce benefits or increase costs to consumers.

Compared to their polices in effect on March 23, 2010, grandfathered plans:

-Cannot Significantly Cut or Reduce Benefits. For example, if a plan decides to no longer cover care for people with diabetes, cystic fibrosis or HIV/AIDS.

-Cannot Raise Co-Insurance Charges. Typically, co-insurance requires a patient to pay a fixed percentage of a charge (for example, 20% of a hospital bill). Grandfathered plans cannot increase this percentage.

-Cannot Significantly Raise Co-Payment Charges. Frequently, plans require patients to pay a fixed-dollar amount for doctor’s office visits and other services. Compared with the copayments in effect on March 23, 2010, grandfathered plans will be able to increase those co-pays by no more than the greater of $5 (adjusted annually for medical inflation) or a percentage equal to medical inflation plus 15 percentage points. For example, if a plan raises its copayment from $30 to $50 over the next 2 years, it will lose its grandfathered status.

-Cannot Significantly Raise Deductibles. Many plans require patients to pay the first bills they receive each year (for example, the first $500, $1,000, or $1,500 a year). Compared with the deductible required as of March 23, 2010, grandfathered plans can only increase these deductibles by a percentage equal to medical inflation plus 15 percentage points. In recent years, medical costs have risen an average of 4-to-5% so this formula would allow deductibles to go up, for example, by 19-20% between 2010 and 2011, or by 23-25% between 2010 and 2012. For a family with a $1,000 annual deductible, this would mean if they had a hike of $190 or $200 from 2010 to 2011, their plan could then increase the deductible again by another $50 the following year.

-Cannot Significantly Lower Employer Contributions. Many employers pay a portion of their employees’ premium for insurance and this is usually deducted from their paychecks. Grandfathered plans cannot decrease the percent of premiums the employer pays by more than 5 percentage points (for example, decrease their own share and increase the workers’ share of premium from 15% to 25%).

-Cannot Add or Tighten an Annual Limit on What the Insurer Pays. Some insurers cap the amount that they will pay for covered services each year. If they want to retain their status as grandfathered plans, plans cannot tighten any annual dollar limit in place as of March 23, 2010. Moreover, plans that do not have an annual dollar limit cannot add a new one unless they are replacing a lifetime dollar limit with an annual dollar limit that is at least as high as the lifetime limit (which is more protective of high-cost enrollees).

-Cannot Change Insurance Companies. If an employer decides to buy insurance for its workers from a different insurance company, this new insurer will not be considered a grandfathered plan. This does not apply when employers that provide their own insurance to their workers switch plan administrators or to collective bargaining agreements.

Secretary Sebelius is holding a press conference today and more guidance should follow.

HHS Issues Guidance on Early Retiree Reinsurance Program

The Department of Health and Human Services has issued guidance and a draft application for the Early Retiree Reinsurance Program.

About the program:

The Congress appropriated funding of $5 billion for the temporary program, which is effective June 1, 2010, under interim final rules published by the Department on May 4, 2010. The program ends no later than January 1, 2014. The program provides reimbursement to participating employment-based plans for a portion of the cost of health benefits for early retirees and their spouses, surviving spouses and dependents. The Secretary will reimburse plans for certain claims between $15,000 and $90,000 (with those amounts being indexed for plan years starting on or after October 1, 2011). The purpose of the reimbursement is to make health benefits more affordable for plan participants and sponsors so that health benefits are accessible to more Americans than they would otherwise be without this program.

In addition to the regulation and information about the program, HHS has released a Draft Application to participate in the Early Retiree Reinsurance Program as well as instructions for completing the Application and frequently asked questions related to the application process. The Official Application, with the address to which it should be submitted, will be posted later in June. As directed in the Early Retiree Reinsurance interim final rule, (see ERRP regulation at 45 C.F.R. §149.40), a plan sponsor interested in applying for the program must submit one application per plan, and identify the plan year cycle for which the sponsor is applying. Applications will begin being accepted no later than June 30, 2010.

To access the links for the guidance and applications documents click here: http://www.hhs.gov/ociio/regulations/index.html

Revamped Tax Bill Omits Extenstion of COBRA Subsidy

UPDATE: An amendmendment to this bill was proposed by Sen. Robert Casey, D-PA on Wednesday, June 9 and would extend eligibility for the subsidy through Nov. 30, 2010.

It appears that eligibility for the 15 month, 65% COBRA subsidy will end on May 31, 2010. Legislators who are becoming more and more leery of approving measures that would deepen the federal deficit did not mention the subsidy in the most recent version of H.R. 4213.

The Senate version of the bill originally proposed that eligibility be extended to employees laid off through the end of 2010. The House subsequently removed that from the bill before passing and sending it back to the Senate. The projected cost of extending the subsidy was $8 billion.

To read the Business Insurance article on this item click here:
http://www.businessinsurance.com/article/20100608/NEWS/100609919

United CEO Confident Companies Will Maintain Healthplans

NEW YORK (Bloomberg)—UnitedHealth Group Inc., the biggest U.S. health insurer by sales, expects companies to keep offering benefits rather than force a migration of workers to the online exchanges created by the U.S. health care law, CEO Stephen Hemsley said at a conference Friday.

Under the law passed in March, companies still face costs for employees’ coverage even if they buy it through the exchanges. Keeping their own plans will give employers the best chance of controlling medical expenses, Mr. Hemsley said in a presentation at the investor conference in New York on Friday. He cited studies by the Congressional Budget Office, which said in December that 134 million people working at companies with 50 or more employees will still get benefits in 2016.

“We don’t expect, nor would anyone else who’s modeling this actually expect, that kind of migration” into the exchanges, Mr. Hemsley said. Businesses “have thought about the fact that they can manage their costs more effectively.”

©2010 Bloomberg News

To view the article in its entirety click here: http://www.businessinsurance.com/article/20100604/NEWS/100609949