Health Reform

August 3, 2010 1

Summary

This presentation will introduce you to the pressing issues you need to be concerned with regarding the Patient Protection and Affordable Care Act signed into law March 2010 Our goal is to help you better understand the impact this will have on you and let you know how we may be able to assist you August 3, 2010 2

Currently On-going

 Grandfathered Health Plans  Employer Subsides of Medicare D  Minimum Loss Ratios  Adoption Coverage  Breaks for Nursing Mothers August 3, 2010 3

Grandfathered Health Plans

  Individuals and employer group plans that wish to keep their current policy on a grandfathered basis would only be able to do so new dependents.

if

the only plan changes made were to add or delete new employees and any Grandfathered plan rules is not limited to individuals enrolled on the date of enactment but rather • New employees (and their families) may be covered under an employer’s grandfathered plan • Family members of current employees who are covered by the grandfathered plan may also be added, if their enrollment was permitted under plan terms on March 23, 2010 HR 3590 Sec 1251, 1301, 1401 PP 43-44, 91, 95, 99, 130-31, 163, 186, 332-34, 767-77, 777 4

 • • • • • Provisions applicable to all group health plans as of the law’s relevant effect date, regardless of “grandfathered” status, include: • Coverage of adult children up to age 26 (grandfathered group health plans do not have to comply with this requirement until the first plan year beginning on or after January 1, 2014, if the adult child is eligible for coverage under another eligible employer-sponsored health plan) Lifetime/annual limit restrictions Rescission restrictions Preexisting condition exclusions 90-days waiting period limit Uniform summary of benefits August 3, 2010 5

  Grandfathered health plans are exempt from various provisions of the health reform law, including: • Coverage of preventive services without cost-sharing • • • • • • Cost-sharing limits Insured group health plan nondiscrimination rules Claims appeals and review process Selection of doctors and referral requirements Coverage of clinical trials No discrimination against providers In addition, an exception is made for employers that have scheduled plan changes as a result of a collective bargaining agreement August 3, 2010 6



Update as of July 2010: Keeping Grandfathered Status

Regulation allow for changes in plan’s benefit structure, so long as none of those changes in the following list: • Eliminating all or substantially all benefits to diagnose or treat a particular condition • Increasing a coinsurance or other percentage-based cost-sharing requirement above the level in effect on March 23, 2010 • Increasing a fixed-dollar cost-sharing requirement, such as annual deductible or out-of-pocket limit, by total percentage – measured from march 23, 2010 – that exceeds the sum of the medical inflation rate plus 15% points.

• Increasing co-payment by an amount exceeding greater of • • The amount just described for other fixed-amount cost-sharing requirements $5 increased by the medical inflation rate since March 23, 2010.

• Decreasing rate of employer contributions to the plan (for any tier, such as employee-only or family) by more than 5% points below rate that was effect on March 23, 2010 • Adopting or decreasing an annual benefit limit, with the specific rules depending on whether the plan had already imposed an annual or lifetime limit as of March 23, 2010 August 3, 2010 7

Update as of July 2010: Keeping Grandfathered Status

  As of now, other types of benefit modifications will not cause a loss of grandfathered status.

• Example: the regulation’s preamble asks for comments on whether changing a plan’s network provider, changing from an insured to a self-funded plan, or changing a prescription drug formulary should be added as events causing a loss of grandfathered status. The preamble assures us that any such change in the regulation would be applied only prospectively The regulations provide that the grandfathering rules apply separately to each “benefit package” made available under a health plan. Thus, a plan offering both an HMO and PPO option might choose to modify the PPO’s deductible or co-payment in a way that would cause the PPO to lose its grandfathered status, without thereby forfeiting the HMO’s grandfathered status.

August 3, 2010 8

Update as of July 2010: Keeping Grandfathered Status

 Implies that, beginning in 2014, premiums can vary more widely for grandfathered plans than for non-grandfathered plans for employers with up to 100 employees  For the purpose of good faith standards, changes adopted prior to June 14, 2010, where the change might otherwise cause the plan to become non-grandfathered, the grandfathered status will be preserved.

August 3, 2010 9

Grandfathered Provision: Limited Transition Relief

 Plans adopted after March 23, 2010, will: • treated as in effect on that date if they were made pursuant to either a legally binding contract or state insurance department filing that was made prior to that date • Now have a “grace period” during which they may revoke those changes and thereby retain their grandfathered status. • Grace period will end on the first day of the first plan year beginning after September 23, 2010.

August 3, 2010 10

Grandfathered Plan Summary Chart

 Summary of 2010-2014  Losing Status August 3, 2010 11

Employer Subsidies of Medicare Part D Premiums

  Eliminates the deduction for the subsidy to employers who maintain prescription drug plans for their Medicare Part D eligible retirees.

In order for coverage to be available under this part for covered part D drugs of a manufacturer, the manufacturer must: • Participate in the Medicare coverage gap discount program under section 1860D-14A • Have entered into and have in effect an agreement described in subsection (b) of such section with the Secretary HR 3590, Section 3301-3315, PP 343 August 3, 2010 12

• Have entered into and have in effect, under terms and conditions specified by the Secretary, entered into a contract with under subsection (d)(3) of such section: • (b) Effective date – shall apply to covered part D drugs • (c) Authorizing coverage for drugs not covered under agreement - subsection (a) shall not apply to the dispensing of a covered part D drug if: • The Secretary has made a determination that the availability of the drug is essential to the health of beneficiaries under this part; or • The Secretary determines that in the period beginning on July 1, 2010, and ending on December 31, 2010, there were extenuating circumstances.

August 3, 2010 13

Minimum Loss Ratios

  Health plans, including “grandfathered plans”, must annually report on the share of premium dollars spent on medical care and provide consumer rebates for excessive medical loss ratios. (

regulatory process starts 2010

) • Applies to “issuers” not employers directly • Rebates must be issued to each enrollee on a pro rata basis when “non claims” cost exceeds 15% of revenue for issues in the large group market and 20% for issuers in the individual and small group markets or lower rates as set by the state. (

Policy rebates in 2011

) • Administered by the HHS The amendment made by this section shall apply to taxable years beginning after December 31, 2009 HR 3590 Sec 3590, PP 754 August 3, 2010 14

Adoption Coverage

 Limit for employer sponsored assistance for adoptions increase from $10,000 to $13,170  Credit is extended through 2011  Phased out for high income earners starting at $182,000 HR 3590 Sec 10909 PP 903 August 3, 2010 15

Breaks for Nursing Mothers

   All employers with 50 or more employees to provide private areas (not restrooms) where mothers of children less than one year old can pump breast milk in private Employers must provide “reasonable” unpaid time for this Smaller employers may be exempted if undue hardship can be demonstrated HR 3590 Sec 4207, PP 459 August 3, 2010 16

Health Reform

2010

August 3, 2010 17

Summary

 Early Retiree Re-insurance  Pre-existing Conditions  Increase in Dependent Coverage  OBGYN Non Referral Provision  Coverage of Preventive Care  Coverage Appeals Process August 3, 2010 18

Summary

 Wellness Grants  Tanning Tax  HSA and MSA Tax  Emergency Service Coverage  Designation of Primary Care Doctor  Web Based Information Portal August 3, 2010 19

Early Retiree Re-insurance Program

  Creates a new temporary reinsurance program to help companies that provide early retiree health benefits for those ages 55-64 offset the cost of that coverage. Employers must apply to the HHS in order to participate in this program.

The federal government will allocate $5 billion toward the creation of a temporary reinsurance program for employer sponsored early retiree coverage that will reimburse 80% of claims between $15,000 and $90,000. The purpose of the program is to encourage employers that currently offer retiree medical coverage to continue to do so until the Exchanges are up and running. HR 3590 Sec 1102, PP 25 August 3, 2010 20

  Cumulative health benefits incurred in a given plan year and paid for a particular early retiree that fall between those amounts will be eligible for reimbursement (rather than reimbursement being made only for discrete health benefit items or services whose reimbursement total falls between those amounts). Reimbursement will be made only for claims that are incurred during the applicable plan year, and paid. Thus, eligible employers can save up to $60,000 per early retiree each year. Eligible claims are those for individuals at least age 55 (and their dependents) who are not eligible for Medicare and are not active workers. • Includes documented retiree cost-sharing (deductibles, copays, coinsurance, etc.) • • Includes medical and prescription drug claims. Excludes HIPAA-excepted benefits (e.g., long-term care and limited scope dental or vision benefits). August 3, 2010 21

   Eligible plans must apply for the program and meet minimum requirements for management of participants with chronic and high cost conditions. Reinsurance payments received by employers must be used to reduce participant and/or sponsor costs. A sponsor must be able to explain how reimbursements will be applied to maintain its level of effort in contributing to support the plan.

Reimbursements are not treated as taxable income to the employer. The program is effective June 1, 2010, and ends January 1, 2014 (or sooner, if funds are depleted). Sponsors may apply for plan years that begin before June 1, 2010, but end after that date. In that case, the amount of claims incurred before June 1, 2010 (up to $15,000) count toward the $15,000 cost threshold and the $90,000 cost limit. The amount of claims incurred before June 1, 2010, in excess of $15,000 is not eligible for reimbursement and does not count toward the cost limit. The reinsurance amount to be paid is based solely on claims incurred on and after June 1, 2010, and that fall between the cost threshold and cost limit for the plan year. August 3, 2010 22

Pre-Existing Condition Coverage for Individual Market

  Federal High Risk Pool for Individuals with a Pre-Existing Condition (

June 2010

) • Provides eligible individuals access to coverage that does not impose any coverage exclusions for pre-existing health condition. This provision ends when Exchanges are operational.

• May be administered by nonprofit organizations under contract from HHS.

• • • • • No preexisting condition limitations Plan must cover at least 65% of medical costs Limitation on total out of pocket expenses Rates based upon a standard population with age rating factor max of 4:1 Eligibility: • Legal resident of the United States • No creditable coverage six months prior to March 23, 2010 or the date on which they apply for coverage under the pool • Has preexisting condition, as determined in a manner consistent with guidance issued by Secretary.

Eliminating Pre-Existing Condition Exclusions for Children • Bars health insurance companies from imposing pre-existing condition exclusions on children less than 19 years of age. (

October 2010

) HR 3590 Sec 1101, PP 23 August 3, 2010 23

Increases in Dependent Coverage

  A group health plan and a health insurance issuer offering group or individual health insurance coverage that provides dependent coverage of children shall continue to make such coverage available for an adult child until the child turns 26 years of age. Nothing in this section shall require a health plan or a health insurance issuer described in the preceding sentence to make coverage available for a child of a child receiving dependent coverage.

The Secretary shall promulgate regulations to define the dependents to which coverage shall be made available under subsection.

HR 3590 Sec 2714, PP 14 August 3, 2010 24

  Nothing in this section shall be construed to modify the definition of ‘dependent’ as used in the Internal Revenue Code of 1986 with respect to the tax treatment of the cost of coverage.

This provision generally is effective for the first plan year beginning on or after September 23, 2010 (i.e., January 1, 2011, for calendar year plans), although collectively bargained plans may have a later effective date. Until the first plan year beginning on or after January 1, 2014, grandfathered group health plans are not required to extend coverage to adult children (up to age 26) who have access to another eligible employer-sponsored health plan (a group health plan or group health insurance coverage which is a governmental plan, or any other plan or coverage offered in the small or large group market within a State).

August 3, 2010 25

OBGYN Non Referral Provision

 General Rights • Direct Access- A group health plan, or health insurance issuer offering group or individual health insurance coverage, described in paragraph (2) may not require authorization or referral by the plan, issuer, or any person including a primary care provider described in paragraph(2)(B)) in the case of a female participant, beneficiary, or enrollee who seeks coverage for obstetrical or gynecological care provided by a participating health care professional who specializes in obstetrics or gynecology. Such professional shall agree to otherwise adhere to such plan's or issuer’s policies and procedures, including procedures regarding referrals and obtaining prior authorization and providing services pursuant to a treatment plan (if any) approved by the plan or issuer.

HR 3590 Sec 2719A PP 772 August 3, 2010 26

• ‘‘(B) OBSTETRICAL AND GYNECOLOGICAL CARE.

—A group health plan or health insurance issuer described in paragraph(2) shall treat the provision of obstetrical and gynecological care, and the ordering of related obstetrical and gynecological items and services, pursuant to the direct access described under subparagraph (A), by a participating health care professional who specializes in obstetrics or gynecology as the authorization of the primary care provider.

HR 3590 Sec 2719A PP 772 August 3, 2010 27

Coverage of Preventive Care

 In general – a group health plan and a health insurance issuer offering group or individual health insurance coverage shall, at a minimum provide coverage for and shall not impose any cost sharing requirements for: • 1. Evidence Force; based items or services that have an effect a rating of ‘A’ or ‘B’ in the current recommendations of the United States Preventive Service Task • 2. immunizations that have in effect a recommendation from the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention with respect to the individual involved; and • 3. with respect to infants, children, and adolescents, evidence-informed preventive care and screenings provided for in the comprehensive guidelines supported by the Health Resources and Services Administration.

• 4. For women, additional preventive care and screenings provided for in comprehensive guidelines supported by the Health Resources and Services Administration • 5. For women, the recommendations issued by the United states Preventive Service Task Force regarding breast cancer screening, mammography, and prevention shall be considered the most current other than those issued in or around November 2009 HR 3590 Sec 2713, PP 13 August 3, 2010 28

Update as of August 1, 2010

    http://www.healthcare.gov/center/regulations/prevent ion.html

Be sure preventive service is not separate from an office visit In-network ONLY All new group health plans and plans in the individual market must provide first dollar coverage for preventive services • This provision appears to eliminate deductibles or other cost sharing mechanisms for preventative care August 3, 2010 29

What is covered for adults?

 Blood pressure, diabetes, cholesterol tests  Cancer screenings  Counseling on tobacco cessation, losing weight, nutrition (from your doctor)  Routine vaccinations  Flu and pneumonia shots  Healthy pregnancy care August 3, 2010 30

Considerations

 If employers want to cover services more broadly than the USPSTF, there may be disputes over payment   The USPSTF guidelines are for individuals in specific categories based on age, risk factors and other clinical conditions It’s essential to have someone prepared to work with carriers to create specific plan designs August 3, 2010 31

Coverage Appeals Process Update as of July 2010

 Requires that any new group health plan or new plan in the individual market implement an effective appeals process for coverage determinations and claims.

• (

Update as of July 23, 2010

): Under new rules, non grandfathered heath plans must implement an internal appeals process for denied claims that conforms to new requirements which are MORE RIGOUROUS than those currently required under ERISA. Furthermore, plans must allow for an external appeals process to be utilized in the event that the internal appeal does not yield a favorable result for the participant.

HR 3590 Sec 2719, PP 769 August 3, 2010 32

Coverage Appeals Process (Internal Claims Appeal)

 A group health plan and the health insurance issuer offering group and individual health insurance coverage shall implement an effective appeals process for appeals of coverage determinations and claims for: • 1 determination of an individual’s eligibility to participate in a plan • • 2- determination that a benefit is not a covered benefit 3- Imposition of a preexisting condition exclusion on otherwise covered benefit • 4- determination that a benefit is experimental, investigational or not medically necessary August 3, 2010 33

Coverage Appeals Process (Internal Claims Appeal)

   Plan or insurer must notify claimant of benefit determination not later than 24 hours (if urgent care is involved) Claimant must be provided with new evidence considered, rationale, notice to enrollees, impartiality of personal involved making the decision and reason(s) for final determination. Continued coverage will be provided during internal review process.

August 3, 2010 34

Coverage Appeals Process (External Appeal Process)

 State or Federal external review can be filed within four months of adverse internal claims review determination  During external appeals process, the following will be considered: • Medical records, health professional’s recommendation, terms of coverage, appropriate practice guidelines, documents from health carrier  Within 45 days, written decision of determination will be provided August 3, 2010 35

Wellness Grants

   The Secretary shall award grants to eligible employers to provide their employees with access to comprehensive workplace wellness programs.

The grant program established under this section shall be conducted for a 5-year period.

The term “eligible employer” means an employer (including a non-profit employer) that: • A. employs less than 100 employees who work 25 hours or greater per week • B. does not provide a workplace wellness program as of the date of enactment of this Act. HR 3590 Sec 10408, PP 859-860 August 3, 2010 36

  An eligible employer desiring to participate in the grant program under this section shall submit an application to the Secretary, in such manner and containing such information as the Secretary may require, which shall include a proposal for a comprehensive workplace wellness program that meet the criteria and requirements. For purposes of carrying out the grand program under this section, there is authorized to be appropriated $ 200,000,000 for the period of fiscal years 2011-2015. Amounts appropriated pursuant to this subsection shall remain available until expended.

August 3, 2010 37

Tanning Tax

  To help pay for the plan, a 10% tax on indoor tanning service Begins in July 2010 HR 3590 Sec 10907 PP 902 August 3, 2010 38

HSA and MSA Tax Increases

    Increases the additional tax for HSA withdrawals prior to age 65 that are not used for qualified medical expenses from 10 to 20 percent. The additional tax for Archer MSA withdrawals not used for qualified medical expenses would increase from 15 to 20 percent.

HSAs- Section 223(f)(4)(A) of the Internal Revenue Code of 1986 is amended by striking “10 percent” and inserting “20 percent”.

Archer MSAs- Section 220 (f)(4)(A) of the Internal Revenue Code of 1986 is amended by striking “15 percent” and inserting “20 percent”.

Effective Date- The amendments made by this section shall apply to distributions made after December 31, 2010.

HR 3590 Sec 9004, PP 736 August 3, 2010 39

Emergency Services Coverage

 Mandates coverage of emergency services at in network level regardless of provider for: • Fully-insured individual health plans • • Fully-insured group plans Self-insured group health plans HR 3590 Sec 2719A PP 771 August 3, 2010 40

Definition of Medical Provider as a Primary Doctor

  Allows for designation of any participating primary care doctor or pediatrician as primary care doctor No preauthorization or referral necessary for OB/GYN services HR 3590 Sec 2719A PP 770 August 3, 2010 41

Web-Based Portal Update as of July 2010

  Immediate establishment in that State.

– not later than July 1, 2010, the Secretary, In consultation with the States, shall establish a mechanism, including an Internet website, through which a resident of any state may identify affordable health insurance coverage options www.healthcare.gov

HR 3590 Sec 1103 PP 28 August 3, 2010 42

43

 Connecting to affordable coverage- An Internet website established under paragraph (1) shall, to the extent practical, provide ways for residents of any States to receive information on at least the following coverage option: • Health insurance coverage offered by health insurance issuers, other than coverage that provides reimbursement only for the treatment or mitigation • • • Medicaid coverage under title XIX of the Social security Act.

Coverage under title XXI of the Social Security A State health benefits high risk pool, to the extent that such high risk pool is offered in such State; and • Coverage under a high risk pool under section 1101.

August 3, 2010 44

Health Reform

2011

August 3, 2010 45

Summary

 Reporting on W 2’s  Qualified Medical Expenses  Cafeteria Plan Safe Harbor  Non-Retaliation Provision  CLASS Act August 3, 2010 46

Reporting on W-2’s

  Employers must include on annual Forms W-2 the aggregate cost of group health plan benefits (excluding FSA, HSA, or Archer MSA contributions, or the cost of long term care, and certain other excepted benefits) provided to employees for taxable years beginning on or after January 1, 2011 (i.e., Forms W-2 issued in 2012 for 2011 wages, and issued thereafter for subsequent years). Employers can calculate the reportable value based on a methodology similar to that used under COBRA (minus the 2% COBRA administrative fee, if charged). If the plan provides for the same COBRA continuation coverage premium for both individual coverage and family coverage, the plan would be required to calculate separate individual and family premiums for this purpose.

H.R. 3590 Sec 902 PP 735 August 3, 2010 47

Qualified Medical Expenses

 Standardizing the Definition of Qualified Medical Expenses.

• Conforms the definition of qualified medical expenses for HSAs, FSAs, and HRAs to the definition used for the itemized deduction. An exception to this rule is included so that amounts paid for over-the-counter medicine with a prescription still qualify as medical expenses.

• Most over the counter drug purchases will no longer qualify as “medical expenses.” • Administrators must eliminate all coverage for over the counter drugs or establish procedures for verifying that beneficiaries hold valid prescriptions.

HR 3590 Sec 9004, PP 736 August 3, 2010 48

 Increases the additional tax for HSA withdrawals prior to age 65 that are not used for qualified medical expenses from 10 to 20 percent. The additional tax for Archer MSA withdrawals not used for qualified medical expenses would increase from 15 to 20 percent.

August 3, 2010 49

  Effective for taxable years beginning on or after January 1, 2011, OTC medications (except insulin) that are not prescribed by a physician will no longer be considered qualified medical expenses that can be reimbursed through health accounts, including health FSAs, HSAs, and HRAs. It appears that expenses for excluded OTC medicines that are incurred on or after January 1, 2011, would no longer be reimbursable through health accounts (but expenses incurred before that date could be reimbursed after that date). August 3, 2010 50

Cafeteria Plan Safe Harbor

   Creates a Simple Cafeteria Plan to provide a vehicle through which small businesses can provide tax free benefits to their employees.

• Designed for business with less than 100 employees.

• • Broader eligibility rules which may allow owners to participate.

Employers must contribute towards cost of benefits under this plan.

The amendments made by this section shall apply to benefits and coverage provided after the date of the enactment of this Act.

Nothing in the amendments made by this section shall be construed to create and inference with respect to the exclusion from gross income of benefits provided by and Indian tribe or tribal organization that are not within the scope of this section and benefits provided prior to the date of the enactment of this Act. HR 3590 Sec 9022, PP 756 August 3, 2010 51

  An eligible employer maintaining a simple cafeteria plan with respect to which the requirements of this subsection are met for any year shall be treated as meeting any applicable nondiscrimination requirement during such year.

The term ‘simple cafeteria plan’ means a cafeteria plan • Which is established and maintained by an eligible employer • Under the plan the employer is required, without regard to whether a qualified employee makes any salary reduction contribution, to make a contribution to provide qualified benefits under the plan on behalf of each qualified employee in an amount equal to a uniform percentage (not less than 2 percent) of the employee’s compensation the plan year or an amount which is not less than the lesser of 6 percent of the employee’s compensation for the plan year, or twice the amount of the salary reduction contributions of each qualified employee.

August 3, 2010 52

Non-Retaliation Provisions

 The Fair Labor Standards Act of 1938 is amended by inserting after section 18B.

 An employee who believes that he or she has been discharged or otherwise discriminated against by any employer in violation of this section may seek relief in accordance with the procedures, notifications, burdens of proof, remedies, and statutes of limitation set forth in section2087(b) of title 15, United States Code HR 3590 Sec 1558 PP 143 August 3, 2010 53

 No limitation on Rights- nothing in this section shall be deemed to diminish the rights, privileges, or remedies of any employer under any Federal or State law or under any collective bargaining agreement. The rights and remedies in this section may not be waived by any agreement, policy, form, or condition of employment.” August 3, 2010 54

CLASS Act

 The purpose of this title to establish a national voluntary insurance program for purchasing community living assistance services and supports in order to • Provide individuals with functional limitations with tools that will allow them to maintain their personal and financial independence and live in the community through a new financing strategy for community living assistance services and supports.

• Establish an infrastructure that will help address the nation’s community living assistance services and supports needs; • • Alleviate burdens on family caregivers; and Address institutional bias by providing a financing mechanism that support personal choice and independence to live in the community HR 3590 Sec 3201 PP 710-714 August 3, 2010 55

Health Reform

2012

August 3, 2010 56

Summary

 Benefits Summary  Plan Provision  Quality Information Reporting  1099 information August 3, 2010 57

Benefits Summary

  Requires that all: • Group health plans (including self-insured plans) • • Group health insurers Individual health insurers Provide a summary of benefits and a coverage explanation to: • All applicants at the time of the application • To all enrollees prior to the time of enrollment or re enrollment • All policyholders or certificate holder at the time of issuance of the policy or delivery of the certificate.

HR 3590 Sec 2715, PP 14-16 August 3, 2010 58

     The summary must include specific information to be determined by the Secretary of DHHS in consultation with the National Association of Insurance Commissioners.

It may not exceed four pages (DHHS will provide a template) and must be linguistically appropriate.

The summary can be provided in paper or electronic form Employers and health plans that willfully fail to provide the information required can be fined up to $1,000 for each such failure Each failure to provide information to an enrollee constitutes a separate offense August 3, 2010 59

Material Modification of Plan Provision

 If a group health plan or health insurance issuer makes any material modification in any of the terms of the plan or coverage involved that is not reflected in the most recently provided summary of benefits and coverage, the plan or issuer shall provide notice of such modification to enrollees not later than 60 days prior to the date on which such modification will become effective 60 HR 3590 Sec 2715, PP 16 August 3, 2010

Quality Information Reporting

  No later than 2012, reporting must be done by a group health plan or insurer offering group or individual health insurance coverage to ensure structures that • Improve health outcomes • Include information regarding wellness programs and may include information on smoking cessation, weight management, stress management, physical fitness, nutrition, heart disease prevention, healthy lifestyle support, diabetes prevention. Requirements are yet to be fully developed and communicated HR 3590 Sec 2717 PP 17 August 3, 2010 61

1099 Information

  All Persons engaged in trade of business and making payment of $600 or more to another person of rent, salaries, wages, premiums, annuities or compensations Must furnish name and address of recipient of income with statements to be furnished to persons with respect to whom information is required HR 3590 Sec 6041 PP August 3, 2010 62

Health Reform

2013

August 3, 2010 63

Summary

 FSA Limits August 3, 2010 64

FSA Limits

  Limiting Health Flexible Spending Arrangement Contributions • Limits the amount of contributions to health FSAs to $2,500 per year, indexed by CPI for subsequent years.

The Limit apply only to health FSAs; they do not apply to dependent care FSAs, health reimbursement arrangements (HRAs), or HSAs. (Current law continues to limit contributions to dependent care FSAs and to HSAs.) HR 3590 Sec 4908I, PP 733 August 3, 2010 65

Health Reform

2014

August 3, 2010 66

Summary

 Pre-existing Condition Exclusion  Employer Waiting Period for Coverage  Penalties for Non-Compliance  Employer Wellness Plans August 3, 2010 67

Pre-existing Condition

 Elimination of all Pre-existing Condition Exclusion • Implements strong health insurance reforms that prohibit insurance companies from engaging in discriminatory practices that enable them to refuse to sell or renew policies due to an individual’s health status. Insurers can no longer exclude coverage for treatment based on pre-existing health conditions. It also limits the ability of insurance companies to charge higher rates due to health status, gender, or other factors. Premiums can vary only on age (no more than 3:1), geography, family size, and tobacco use.

68 HR 3590 Sec 2701, PP 37 August 3, 2010

Employer Mandate Waiting Period for Coverage

 Employer Mandate • Requires employers with 50 or more employees who do not offer coverage to their employees to pay $2,000 annual for each full-time employee over the first 30 as long as one of their employees receives a tax credit.

• Requires employees who offer coverage but whose employees receive tax credits to pay $3,000 for each worker receiving a tax credit up to an aggregate cap of $2,000 per full-time employee.

HR 3590 Sec 2708, PP 43 August 3, 2010 69

Employer Waiting Period for Coverage

• Precludes waiting periods over 90 days HR 3590 Sec 2708 PP 43 August 3, 2010 70

Penalties for Non-Compliance

 Penalties will be assessed due to • Improper disclosure of information (

PP 113

) • False information imposed on an individual (

PP 112

) • Certification and compliance failures from carriers (

PP 32-33

) • Individual penalties for not having minimum coverage (

PP 131-133

) • Large group penalties for not reporting employee health information (

PP 137-1390

) HR 3590 Sec 1411, PP 112-115 August 3, 2010 71

Employer Wellness Plans

  Increases the reward possible for these programs from 20% to 30% with a possible increase in up to 50% of the cost for employee coverage or the cost of family coverage In addition, the Secretary shall evaluate community prevention and wellness programs to be sure they are evidence-based, and have demonstrated potential to help beneficiaries (particularly beneficiaries that have attained 65 years of age) reduce their risk of disease, disability, and injury by making healthy lifestyle choices, including exercise, diet, and self-management of chronic disease.

HR 3590 Sec 4202,2705 PP 451, 38 August 3, 2010 72

Employer Wellness Plans – Update as of July 2010

 Worksite Health Promotion  Task Force Recommendations and Findings – recommended vs. insufficient evidence  Examples: Flu vaccinations, Health Risk Assessment, Smoking Cessation, Promoting Physical Activity HR 3590 Sec 4202,2705 PP 451, 38 August 3, 2010 73