health care reform

frequently asked questions

As can be expected with any major legislative reform, there are many questions from employers and members alike regarding the effects of the recently passed Patient Protection and Affordable Care Act (PPACA). To help navigate the complexities of this legislation, Group Health Cooperative of Eau Claire has created this FAQ page to answer some of the most commonly asked questions about PPACA.

Be sure to check back, as more questions will be added to the list as additional regulations defining the provisions of the bill are released.

These frequently asked questions are provided for your information. This information on this page is not intended as legal advice. It is important that you consult with your tax advisor regarding questions specific to your unique situation.

questions?

Where can I find the full-length version of the Health Reform Bill?

For the full text version of PPACA, please visit the Official White House website.

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How will the Cooperative administer the adult children dependency provision of PPACA, and how does this affect the Wisconsin dependency state mandate?

Under WI Act 32, as of July 1, 2011 the Wisconsin mandate regarding insurance coverage for adult dependent children has been modified.

Previously under Wisconsin law, adult dependent children who were qualified dependents could be covered under their parents policy until they reached the age of 27 or until they were married. Under WI Act 32, the age limit has been lowered to age 26; the marital status requirement has remained unchanged.

Under the Federal Health Care Reform Mandate (PPACA), health plans are required to provide coverage to adult dependent children to the age of 26, regardless of their marital status.

Effective January 1, 2012, for all new and renewing groups, the Cooperative will provide coverage to eligible adult dependents up to age 26, regardless of marital status. The dependent is no longer eligible once they turn 26 years old and the Cooperative will terminate their insurance at the end of the month that they turn 26.

On November 4, 2011 Governor Walker enacted legislation that simplified Wisconsin’s income tax laws; health insurance benefits are no longer taxable income. This legislation is retroactive to January 1, 2011; the credit will be applied on your 2011 income taxes. For more information, please consult with your tax preparer or visit the WI Department of Revenue website at this link: http://www.revenue.wi.gov/news/20111107_01.pdf

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Can you give me some information about the early retiree benefit I’ve been hearing about?

From 1988 to 2008, the number of large firms that provided retiree coverage dropped nearly in half. The Affordable Care Act provides $5 billion dollars to subsidize employers to help them maintain coverage for employees (and dependents) who are age 55-64, who choose to retire and who are not yet eligible for Medicare benefits. These dollars can be used to provide premium relief, reduce the cost of care, or both. The program lasts until 2014 or until the $5 billion dollars earmarked to fund it have been depleted.

For more information on the Early Retiree Reinsurance Program, visit the official fact sheet on the White House’s website.

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What are "grandfathered" plans and what makes them different?

PPACA defines “grandfathered health plan” to mean any group health plan or health insurance coverage in which an individual was enrolled and that was in effect on the date of the enactment of the Act (March 23, 2010). The grandfathered plan rules provide an exception to many of the Act’s mandates, but not all of them. Grandfathered plans must be amended to comply with the following mandates under the Act, generally by the plan year beginning after September 23, 2010 (January 1, 2011 for calendar year plans):

  • Pre‐existing condition exclusions for children under the age of 19;
  • Lifetime and some annual limits;
  • Rescissions;
  • Coverage of adult children to age 26;
  • Uniform explanations and standardized definitions; and
  • Cost reporting and rebates for insured plans.

Grandfathered plans also must be amended to comply with the following mandates under the Act, by the plan year beginning on or after January 1, 2014:

  • Pre‐existing condition exclusions for all covered individuals;
  • Some annual limits; and
  • Waiting periods in excess of 90 days.

The Act clearly provides that the enrollment of new employees, and new family members of individuals enrolled on the date of enactment, will not cause the plan to lose its grandfathered status. The Health and Human Services Secretary has yet to define the changes to a health plan (eligibility or benefits) that would affect or negate the grandfathered status.

For more information on this and other provisions of the Health Care Reform Bill, visit the Health and Human Services website and the official White House pages on PPACA.

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Where can I find more information about Preventive Services?

The Departments of Health and Human Services (HHS), Labor, and the Treasury issued new regulations on July 14, 2010 requiring new private health plans to cover evidence-based preventive services and eliminate cost sharing requirements for such services. Under the regulations, new health plans beginning on or after September 23, 2010, must cover preventive services that have strong scientific evidence of their health benefits, and these plans may no longer charge a patient a copayment, coinsurance or deductible for these services when they are delivered by a network provider. Specifically, these recommendations include evidence-based preventive services, routine vaccines, prevention for children and prevention for women. More information on the Affordable Care Act’s new rules on preventive care can be found online at: http://www.healthcare.gov/law/about/provisions/services/index.html.

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What are "essential benefits"?

Section 1302(b) of the Affordable Care Act defined essential benefits to "include at least the following general categories and items and services covered within the categories:"

  • Ambulatory Patient Services
  • Emergency Services
  • Hospitalization
  • Maternity and Newborn Care
  • Mental Health and Substance Use Disorder Services, including Behavioral Health treatment
  • Prescription Drugs
  • Rehabilitative and Habilitative Services and Devices
  • Laboratory Services
  • Preventive and Wellness Services and Chronic Disease Management
  • Pediatric Services, including Oral and Vision Care
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What does the November 17th amendment to grandfathering mean?

Per the November 17, 2010 Federal Register:

The modification provides that a group health plan does not cease to be grandfathered health plan coverage merely because the plan (or its sponsor) enters into a new policy, certificate, or contract of insurance after March 23, 2010 (for example, a plan enters into a contract with a new issuer or a new policy is issued with an existing issuer). The amendment applies to such changes to group health insurance coverage that are effective on or after November 15, 2010, the date the amendment to the interim final regulations was made available for public inspection. The amendment does not apply retroactively to such changes to group health insurance coverage that were effective before this date.

Under this new regulation, group health plans are allowed to change a health insurance policy or issuer providing health insurance coverage without ceasing to be a grandfathered plan, provided that the standards set forth under paragraph (g)(1) of the interim final regulation are met. The six standards that would still disqualify a plan from maintaining grandfathered status with or without a switch to a new health plan are:

  1. Elimination of all or substantially all benefits to diagnose or treat a particular condition.
  2. Increase in a percentage cost-sharing requirement (e.g., raising an individual’s coinsurance requirement from 20% to 25%).
  3. Increase in a deductible or out-of-pocket maximum by an amount that exceeds medical inflation plus 15 percentage points.
  4. Increase in a copayment by an amount that exceeds medical inflation plus 15 percentage points (or, if greater, $5 plus medical inflation).
  5. Decrease in an employer’s contribution rate towards the cost of coverage by more than 5 percentage points.
  6. Imposition of annual limits on the dollar value of all benefits below specified amounts

There is also a clause in this new rule requiring that if a group health plan wants to enter into a new policy under this new rule, they must be required to provide their new insurance issuer with documentation that proves the terms of their prior plan coverage.

More information can be found at http://www.healthcare.gov

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How will employers inform employees of the cost of health coverage?

The Internal Revenue Service (IRS) has issued Notice 2011-28 which provides guidance on how employers will be required to inform employees of the cost of health coverage. Under The Affordable Care Act (ACA), employers are required to provide an annual written statement to each employee of the aggregate cost of employer-sponsored coverage. HIPAA "excepted benefits" are not subject to the requirements. In addition, amounts contributed to an Archer MSA, Health FSA, Health Savings Account or Health Reimbursement Arrangement are not reported.

This new IRS guidance makes clear that the reporting requirements will be effective for most employers for calendar year 2012, and that employers will be required to report the information on W-2 forms in January 2013. Employees who terminate employment during the calendar year must receive the report within 30 days after submitting a written request. Employers that file fewer than 250 W-2 forms will not be required to report prior to January 2014. The IRS guidance also addresses methods employers may use to determine the cost of coverage including the cost for fully-insured and self-funded coverage. Employers may choose whether to report the cost of continuation coverage.

After reviewing Notice 2011-28, if you have questions regarding how to determine or report the cost of coverage, we encourage you to consult with your tax preparer or attorney.

A copy of Notice 2011-28 can be found at this link: http://www.irs.gov/pub/irs-drop/n-11-28.pdf

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