Implementation Issues for Employer Plans

Steve WojcikVice President, Public Policy

National Business Group on Healthwojcik@businessgrouphealth.org

Washington, DCSeptember 8, 2010

2

Patient Protection and Affordable Care Act of 2010

• Employer Plans Must Make Decisions in Face of Regulatory Uncertainty

• Law Will Raise Employer Plan Administration Costs

• Plans Expect Overall Health Care Costs to Continue to Outpace Economic Growth

33

Estimated Cost Increase Due to PPACA-related Plan Changes

3%

30%

12%

13%

28%

13%

N/A -- Already incompliance

Don't know

Increase by 5% or more

Increase by 3-4%

Increase by 1-2%

Increase by less than 1%

Source: Mercer, Health Care Reform – Sizing up the Challenge, 2010.

4

Key Employer Provisions that Affect All Plans in 2011

• New Plan Requirements (2011)– Cover Dependents Up to Age 26– No Lifetime Dollar Limits on Overall Benefits– Restrictions on Annual Dollar Limits on Overall Benefits– No Pre-Existing Condition Exclusions for Children under 19

• No Use of FSA, HSA, or HRA for OTC Medicines (2011)

• Increase Penalty for Use of HSA for Non-Medical Expenses (2011)

• Decide When to Relinquish Grandfathered Plan Status (2011)

5

Additional Requirements for Non-Grandfathered Plans

• 100% Coverage of Preventive Health Services (2011)– USPSTF Recommended Services, A or B– CDC-Recommended Immunizations– HRSA Guidelines for Preventive Care and Screenings for Infants,

Children and Women

• HHS-Approved Internal Appeals and External Review Processes (2011)

• Nondiscrimination Rules (Insured Plans Only) (2011)

• Eliminate Prior Authorization or Higher Out-of-Network Cost-Sharing for Emergency, Ob/Gyn, and Pediatric Services (2011)

• File Plan Financial Reports with HHS/State Insurance Depts. (2011)

• File Quality of Care Reports with HHS (2012)

• Cover Routine Care Costs for People in Clinical Trials (2014)

• Cost-Sharing Limits not to Exceed HSA Maximums (Currently $5950 Individual, $11,900 Family) (2014)

6

Key Employer Provisions that Take Effect in 2012-2013

• Report Value of Health Benefits on W-2s (2012)

• Provide Summary of Benefits and Coverage, Material Modifications in Terms and Coverage of Plans that Meets HHS Standards to Plan Enrollees No Later than March 23, 2012– Plans Have 60 Days to Notify Enrollees of Plan Changes

• Auto-Enroll New Hires in Health Plan (Likely Effective in 2013)

• Limit Maximum FSA Amount to $2,500 (2013)

• Notify Employees of Availability of and Potential Eligibility for Health Insurance Exchanges/Tax Credits (March 1, 2013)

• Begin Medicare Surtax for High Income Earners (2013)

7

Key Employer Provisions that Take Effect in 2014 and Beyond

• Employer Penalties for not Offering Coverage or for Coverage That Is Not Deemed Comprehensive or Affordable (2014)

• Employer Subsidy Vouchers for Certain Employees Whose Coverage Approaches Unaffordability (2014)

• Additional Employer Plan Requirements (2014)– No Annual or Lifetime Limits on Essential Benefits– Bans Waiting Periods Longer than 90 Days– Bans Pre-Existing Conditions Exclusion Clauses for Adults

• HIPAA-Allowed Wellness Incentives Increase to 30% of Total Plan Costs (2014)

• Medicaid Assistance to Medicaid-Eligible People in Employer Plans (2014)

• Begin 40% Excise Tax on Higher Cost Plans (2018)