Does your health plan provide minimum value?

If you’re an applicable large employer pursuant to the Patient Protection and Affordable Care Act (ACA), you may be liable for an assessable payment if even one of your full-time employees receives a premium tax credit, beginning in 2014.

Individuals generally may not receive a premium tax credit if they are eligible for affordable coverage under an eligible employer-sponsored plan that provides minimum value (MV).

So, the question arises: what’s MV?

Total allowed costs of at least 60%

Recently proposed regulations provide that for employer-sponsored plans to provide MV, the percentage of total allowed costs of benefits provided to an employee (MV percentage) must be at least 60%.

Note that employer contributions for the current plan year to health savings accounts that are offered with an eligible employer-sponsored plan are taken into account for that plan year towards the plan's MV percentage, according to the proposed regulations. Also, amounts newly made available for the current plan year under a health reimbursement arrangement that is integrated with an eligible employer-sponsored plan are taken into account for that plan year towards the plan's MV percentage if the amounts may be used only to reduce cost-sharing for covered medical expenses.

How does a plan measure MV?

The IRS allows employer-sponsored plans to use one of several different approaches to ascertain if their plan provides MV. Those approaches are:

1. an actuarial value (AV) calculator or MV calculator, either of which would permit employer-sponsored plans to enter data regarding the plan’s benefits, service coverage, and cost-sharing terms to determine if they provide MV;

2. an array of design-based safe harbors from the HHS and IRS;

3. an appropriate certification by a certified actuary, for plans with nonstandard features that preclude the use of the AV calculator or MV calculator without adjustments; or

4. for plans in the small group market, meeting the metal levels of coverage for essential health benefits (EHB) will be sufficient to satisfy MV.

The MV calculator can be found at: http://cciio.cms.gov/resources/regulations/index.html#pm.

Proposed safe harbors

Plan designs meeting the following specifications are proposed as safe harbors for determining MV if the plans cover all of the benefits included in the MV calculator:

1. a plan with a $3,500 integrated medical and drug deductible, 80 percent plan cost-sharing, and a $6,000 maximum out-of-pocket limit for employee cost-sharing;

2. a plan with a $4,500 integrated medical and drug deductible, 70 percent plan cost- sharing, a $6,400 maximum out-of-pocket limit, and a $500 employer contribution to an HSA; and

3. a plan with a $3,500 medical deductible, $0 drug deductible, 60 percent plan medical expense cost- sharing, 75 percent plan drug cost-sharing, a $6,400 maximum out-of- pocket limit, and drug co-pays of $10/$20/$50 for the first, second and third prescription drug tiers, with 75 percent coinsurance for specialty drugs.

Take me out to the ballgame . . . and sign me up for health insurance

The Affordable Care Act (ACA) is the law of the land. It has been for over three years now despite legal challenges, elections, debates, complaints, aches and pains.

Yet, a recent survey shows that 42% of Americans are unaware that the ACA is still the law of the land.

Can you say . . . yikes?!?

The survey also found:

• Twelve percent believe the law has been repealed by Congress,
• Seven percent believe it has been overturned by the Supreme Court, and
• Twenty-three percent say they don’t know enough to say what the status of the law is.

I don’t know about you, but I find this unsettling. Open enrollment for the health insurance exchanges (also called “marketplaces”) is less than 6 months away (October 1), but so many of us remain confused about the law.

Even worse, the survey notes that the share of the public who says they lack enough information to understand how the ACA will affect their family is higher among two groups the law is likely to benefit most – the uninsured (58% of whom say they lack enough information) and low-income households (56% say so).

(In case you’re wondering, the survey was conducted April 15‐20, 2013, among a nationally representative random digit dial telephone sample of 1,203 adults ages 18 and older, living in the United States, including Alaska and Hawaii).

Celebs, sports, kids to the rescue

So, what’s the best way to get the word out about the ACA, the exchanges, and the importance of signing up for health insurance?

I know the first answer is obvious to everyone – Facebook! And, of course, it was obvious to the folks in charge, so we have Healthcare.gov on FB. Some might quibble with the name (why not just call it Obamacare because that’s what most people do?), but at least it’s available.

Not being a FB fan myself (please, no death threats!), here are a few other ideas to spread the word:

Celebrity tweets. Why not have Kim Kardashian, Lady Gaga and Justin Bieber send out tweets about the ACA? We all know they have more followers than any government agency. Plus, they’d inject the “cool” factor into having insurance. It’s like, hey, everyone’s signing up – join the party.

Sporting events. Another idea is to team up with professional sports teams and use the venues to distribute information and foster enrollment. I can’t take credit for this idea because the folks in Massachusetts came up with it and used it successfully as a public education campaign when the state’s health insurance mandate became effective years ago. The campaign included, among other things, an information kiosk at all Boston Red Sox home games for fans to find out about – and enroll in – the offered health insurance plans, and informational inserts in the game programs. What’s better than a day at the ballpark with your glove, a hot dog and a health insurance application?

School kids. How about we get the school kids involved and send materials home with them to their parents? It’s never too early to learn about health, and those little buggers can be persuasive once they understand the importance of an issue (have you ever tried throwing away a recyclable can in front of a kid? They think it’s akin to a crime!).

Public transportation. And, last but not least, information can be posted on public buses, trains and subways. Many public service announcements already appear in those spaces, and I’m guessing that soon we’ll be seeing exchange enrollment information during our travels.

Health insurance application gets makeover

If you had your druthers, would you rather fill out a form to sign up for health insurance that’s 21 pages long or a form that’s three pages long?

No, it’s not a trick question! Nobody on the planet likes filing out forms.

So, you’ll be happy to know that the Centers for Medicare & Medicaid Services (CMS) has announced that the application for health coverage has been simplified and significantly shortened. The application for individuals without health insurance has been reduced from 21 to three pages, and the application for families is reduced by two-thirds. The consumer friendly forms are much shorter than industry standards for health insurance applications today, according to CMS.

In addition, for the first time consumers will be able to fill out one simple application and see their entire range of health insurance options, including plans in the Health Insurance Marketplace, Medicaid, the Children’s Health Insurance Program (CHIP) and tax credits that will help pay for premiums.

The applications, which can be submitted starting on October 1, can be found here: http://cciio.cms.gov/resources/other/index.html#hie

“Consumers will have a simple, easy-to-understand way to apply for health coverage later this year,” said CMS Acting Administrator Marilyn Tavenner. “The application for individuals is now three pages, making it easier to use and significantly shorter than industry standards. This is another step complete as we get ready for a consumer-friendly marketplace that will be open for business later this year.”

New tools for COBRA, ACA marketplace notice requirements are posted by EBSA

The Employee Benefits Security Administration (EBSA) has issued guidance, pending future issuance of regulations or other guidance, of course, on a requirement under section 1512 of the Patient Protection and Affordable Care Act (ACA) that notice be given to employees regarding coverage options available through the new state healthcare exchanges, also known as the health insurance marketplaces. The guidance also includes information on model COBRA election notices.

ACA Sec. 1512 created a new Fair Labor Standards Act (FLSA) section 18B to provide that a written notice including the following information must be given by applicable employers (see www.dol.gov/compliance/guide/minwage.htm to see if you’re eligible) to employees, regardless of enrollment status or part-time or full-time status:

● Information on the existence of the marketplace, its services, and contact information;

● An explanation that, in instances in which an employee purchases coverage through the marketplace, he or she may be eligible for a premium tax credit under Code Sec. 36B (if the employer plan’s share of total allowed costs of benefits under the plan is less than 60% of those costs); and

● Advice that any employer contribution to a health benefits plan may be lost if the employee purchases coverage through the marketplace, and that the employer contribution may have been excludable from federal income tax.

Originally, the notices were to be provided to employees by March 1, 2013, but the Labor Department stated on January 14, 2013 (see FAQs about Affordable Care Act Implementation Part XI Question 1 - www.dol.gov/ebsa/faqs/faq-aca11.html ), that, in order to facilitate a smooth implementation process and give employers time to comply, the timing for distribution was expected to be late summer or fall of 2013.

The guidance and associated new model notices (one for employers who offer health coverage to some or all employees, and one for employers who do not offer coverage) are being issued by the EBSA in response to requests from employers, and employers may use the model notices now to inform employees about upcoming coverage options that will be available via the marketplace, although notices do not have to be provided to employees until October 1, 2013.

Employers may use a modified form of the notices, but all of the content requirements listed above must be included. Additionally, notices must be provided automatically, free of charge, and must be in writing in a manner calculated to be understood by the average employee, and they may be provided either by first-class mail, or electronically, as long as the Labor Department’s electronic disclosure safe harbor requirements are met (see ERISA Reg. Sec. 2520.104b-1(c)).

The model notices can be viewed at www.dol.gov/ebsa/pdf/FLSAwithplans.pdf and www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf.

COBRA election notice requirements. In this latest guidance, the EBSA reminds employers that an election notice must be provided by a group health plan to qualified beneficiaries (individuals with a right to  continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, or COBRA, due to a qualifying event) within 14 days after the plan administrator receives notice of the qualifying event. Information on COBRA continuation requirements applicable to group health plans is available at www.dol.gov/ebsa/publications/cobraemployer.html.

In addition to the information required to be included in the COBRA election notice, there may be information on marketplace health coverage alternatives that qualified beneficiaries may want to consider, the EBSA says. Without specifically saying that employers must include this information in the COBRA election notice, the EBSA is providing a new model COBRA election notice that includes information on marketplace alternatives (at www.dol.gov/ebsa/modelelectionnotice.doc). An interesting redlined version, highlighting the additions to the original COBRA election notice can be found at www.dol.gov/ebsa/modelelectionnoticeredline.doc, although both notices take while to load.

The EBSA then states that use of this new model notice will be considered to be good faith compliance with COBRA’s election notice requirements. Those who wish to have more information on the above are advised to contact the EBSA at (202) 693-8335.

Oregon Study delivers mixed results for ACA Medicaid expansion

There may be bad news out there for supporters of the Patient Protection and Affordable Care Act (ACA), and especially for those in favor of its Medicaid expansion provisions. Or not. The responses to the Oregon Study certainly demonstrate that people will often see what they want to see. The results of the study, as published in the New England Journal of Medicine, have generated a lot of dispute online, with some pointing to the study’s results as proof that “Obamacare” will fail, or that Medicaid expansion will be a waste of money for those states that choose it, and others pointing to some of the experiment’s positive outcomes. 

In 2008, an expansion of Medicaid in Oregon used a lottery system to determine eligibility for covrerage, and approximately 2 years later the study’s authors obtained data from 6387 adults who were selected in the lottery system and compared it to 5842 adults who were not selected.

The study’s authors reported that, for the first two years of coverage, whether or not someone had access to the expanded Medicaid had no effect on the prevalence or diagnosis of hypertension or high cholesterol levels or on patients' use of medication for these conditions, a result that some have characterized as devastating for supporters of the ACA. Effectively, the study’s authors said, no significant improvements in measured physical health outcomes were detected in the first 2 years of coverage.