Monday, September 22, 2014

Cafeteria plans may allow revocations of health plan elections to purchase Exchange coverage

In Notice 2014-55, effective Sept. 18, 2014, the IRS is allowing employers to expand the application of the permitted change rules for health coverage to accommodate certain situations arising from the Patient Protection and Affordable Care Act. The guidance will remain in effect until the IRS changes its cafeteria plan regulations to conform to the new guidance. A cafeteria plan may allow an employee to prospectively revoke an election of coverage under a group health plan that is not a health FSA and that provides minimum essential coverage provided certain conditions are met.

The guidance addresses two situations in which a participant may want to revoke coverage to purchase a qualified health plan (QHP) through an Exchange. The first situation is a participating employee whose hours of service are reduced so that the employee is expected to average less than 30 hours of service per week but for whom the reduction does not affect the eligibility for coverage under the employer’s group health plan. The second situation is an employee participating in an employer’s group health plan who would like to cease coverage under the group health plan and purchase coverage through an Exchange without that resulting either in a period of duplicate coverage under the employer’s group health plan and the coverage purchased through an Exchange or in a period of no coverage.

Friday, September 19, 2014

ACA turns the tables on state mandates

In a move to reduce state health mandates, the Patient Protection and Affordable Care Act (ACA) (P.L.111-148) is aiming to shift the cost of insurance coverage of certain medical care or services from insurers to states. While state mandates serve to address coverage shortcomings, the Kaiser Family Foundation (KFF) reports that the insurance industry asserts that state mandates are causing higher costs of insurance for consumers. Some states are attempting to avoid the ACA’s provisions by re-vamping any new health mandates in a way that they will not have to pay for them.

State mandates. State coverage mandates may require insurance companies to pay for a wide array of benefits coverage, such as emergency services or maternity care, or require insurance to cover specific benefits such as autism services or specialty provider services such as those provided by chiropractors. The mandates may either apply to all individual and group plans regulated by the state or be more limited in scope. KFF cites an instance in California in which the state legislature approved a bill to mandate that large group plans cover fertility preservation services such as freezing eggs or sperm for cancer patients. In an effort to uphold the ACA provisions, Governor Jerry Brown vetoed the mandate even though the state would not have had to pay for it since it did not apply to small group or individual plans.
ACA shift. In a post-ACA world, sec. 1301(a)(1) of the ACA established a set of essential health benefits (EHBs) that individual and small group plans must cover. In 2014, an EHB package generally must: (1) offer coverage for specific categories of benefits; (2) meet certain cost-sharing standards; and (3) provide certain levels of coverage. Items or services to be covered under the EHB package include:

·         Ambulatory patient services;
·         Emergency services;
·         Hospitalization;
·         Maternity and newborn care;
·         Mental health and substance use disorder services;
·         Prescription drugs;
·         Rehabilitative and habilitative services and devices;
·         Laboratory services;
·         Preventive and wellness services (including chronic disease management); and
·         Pediatric services (including oral and vision care).

In an effort to sway states from passing mandates that avoid EHB requirements, the ACA requires the states to pay for any new mandates passed after 2011 that increase premiums for individual and small group coverage plans that are sold on or off the state health insurance Marketplaces. If a mandate increases a plan’s premium, states will be responsible for the additional premium cost associated with the mandate.
The payment requirement is waived until 2016, but some states, such as Alabama, North Dakota, and Washington, are attempting to evade payment by excluding plans requiring EHBs from their mandates or by restructuring their mandates to only apply to large group plans. As a consequence, consumers who buy individual or small group plans may not get the mandated benefits that are required in large group plans and may be confused as to what is actually covered. Further, there may be confusion as to which party is responsible for health costs.
Many specialty fields are seeing the effects of the states’ avoidance of EHBs. Lorri Unumb, vice president of state government affairs at Autism Speaks, said that “For the most part, the states that have passed autism mandates post [December 31, 2011], have excluded ACA-compliant plans from the mandate.” For instance, Alabama, Idaho, North Dakota and Oklahoma have refused to pursue autism insurance reform.

Wednesday, September 17, 2014

Employer mandate is not pushing workers into part-time gigs, study finds

Despite claims that the Patient Protection and Affordable Care Act (ACA) would lead to an increase in part-time work, no ACA-attributable increase was seen by the Urban Institute for 2014. The Urban Institute issued a brief exploring the theory that part time work would increase at the expense of full time employment, concluding that the small increase that was seen is attributable to economic recovery.

The Urban Institute noted that the ACA could increase the number of part-time workers in two ways. First, businesses seeking to avoid the employer mandate could cut workers hours to ensure they had fewer than 50 full time employees. Second, with other ways to purchase health insurance and expanded Medicaid eligibility, some workers might voluntarily cut their hours. Looking back at 2013 figures, the Urban Institute found that the rate of part-time work was “exactly what we would expect it to have been given unemployment rate trends up to that point.”

Finding that there was an increase in involuntary part-time work was in line with historic patterns, the Urban Institute concluded that the increase was “due to a slower than normal recovery of full-time jobs following the Great Recession.” The study also looked at historical data, particularly labor market trends in Hawaii after its employer mandate legislation in 1970. Noting that the information “holds limited applicability to the entire United States”, the rate of part time work in Hawaii was 1.4 percentage points higher than the rest of the nation over a 23-year period.

Monday, September 15, 2014

Full D.C. appellate panel to rehear decision striking ACA premium subsidies

The U.S. Court of Appeals for the District of Columbia has granted a petition for a rehearing en banc of Halbig v. Burwell, in which three of the court’s judges reversed a district court’s ruling that the ACA’s premium subsidies apply to both state-operated and federally-established Exchanges.

The motion for a full-panel rehearing was a good tactical move for the defendants, partly because it could slow down the Halbig case's progress in reaching the Supreme Court, according to Tom Christina of Ogletree Deakins. This is because other cases in different federal courts have raised the same issue regarding regulations under Code Sec. 36B, and the Obama administration may decide they would prefer one of those to reach the Supreme Court first, he explained back in July, when the Halbig decision was announced.
In fact, there has already been a petition for a writ of certiorari filed with the U.S. Supreme Court by the plaintiffs in King v. Burwell, in which the Fourth Circuit issued an opinion directly opposite that of the Halbig court’s decision.
Furthermore, there are more Democratic appointees on the D.C. appellate court than there are Republicans. As a result, a judgment in favor of the government may be more likely. The order for a rehearing was issued on September 4, 2014, and oral arguments will be heard the morning of December 17, 2014.

Friday, September 12, 2014

California gets on board with ACA waiting period rule

Effective January 1, 2015, California state law regarding waiting periods for health care coverage will conform to the Patient Protection and Affordable Care Act’s (ACA) waiting period limit. Governor Brown has signed into law Senate Bill (S.B. 1034), which will impose a 90-day limit on eligibility waiting periods for insured health benefits. The law also prohibits a health care service plan or health insurer offering group coverage from imposing a separate waiting or affiliation period in addition to any waiting period imposed by an employer for a group health plan on an otherwise eligible employee or dependent.
Conflicting laws. The ACA prohibits group health plans and health insurance issuers offering group coverage from applying any waiting period of more than 90 days before coverage starts. California also had enacted a law regarding waiting periods. That law imposed a 60-day limit on eligibility waiting periods for insured plans. The new state law repeals the 60-day limit and clarifies that waiting periods in addition to the ACA standard are not permitted.

“In a world of guaranteed issue and no preexisting condition exclusions there is no reason for health insurance companies to impose a waiting period in addition to an employer’s ACA compliant waiting period,” stated Senator Bill Monning (D-Carmel), who authored the bill. “SB 1034 will resolve confusions that exist because state and federal laws are not aligned, and I applaud the Governor for signing this important bill.”

The California Chamber of Commerce also noted, “Clarification of the law also will help multi-state employers by ensuring they have just one date to keep in mind when determining when a new hire or otherwise newly qualified employee must be enrolled in a health care plan.”