HHS Announces Proposed Rule for Uniform Benefit Summaries

On August 17, the Department of Health and Human Services (HHS) released a Notice of Proposed Rulemaking for Uniform Benefit Summaries under the Patient Protection and Affordable Care Act (PPACA).

The intent of Uniform Benefit Summaries is to provide individuals with standardized information so they can review medical plans, compare insurers and make decisions about medical plan choices.  The proposed rule provides additional guidance on the information that must be provided to all individuals enrolling in a medical plan on or after March 23, 2012.

This provision applies to individual and employer-sponsored medical plans, regardless of grandfathered status or funding. It does not apply to retiree-only plans or to standalone dental and vision plans.

What Information Must be Included

Insurers and self-insured employers must provide a Summary of Benefits and Coverage (also referred to as an ‘SBC’ in the proposed rule) to individuals who apply for and enroll in medical plans. The Summary of benefits and Coverage is a required document that must be provided in the standard format.

There are four standard components:

  • A four-page Benefit Summary (double sided)
  • Medical Scenarios called “Coverage Examples” that  are patterned after the Food and Drug Administration food labels. They estimate customer costs based on the specific plan’s benefits for three medical scenarios – Maternity, Breast Cancer Treatment and Managing Diabetes
  • A standard glossary of medical and insurance terms
  • A phone number and website where individuals can get additional information including documents such as Certificates, Summary Plan Descriptions (SPDs) and policies

HHS asked the National Association of Insurance Commissioners (NAIC) to propose a format for the four components in the Summary of Benefits and Coverage. Here is a link to the documents proposed by NAIC: http://www.naic.org/committees_b_consumer_information.htm

The information on the NAIC website is not a guideline or example. It is the exact wording, format and layout that must be used. Insurers and employers will just insert plan details into the predetermined rows and columns.

The Benefit Summary must be a freestanding document and may not be incorporated into any other document. Supplemental
communication materials may be provided with it. Currently produced documents will not satisfy the requirements of the regulation.

The Coverage Examples must include three pre-defined medical scenarios: Maternity, Breast Cancer Treatment and Managing Diabetes. These scenarios are intended to show typical services and cost sharing under the plan. The numbers would be based on client-specific plans and costs. The estimates are based on national average costs and in-network benefit levels.

Who is Responsible for Providing the Information

For fully insured plans and HMOs, the insurer is responsible for producing and distributing the summaries. For self-insured
plans, the responsibility lies with the employer.

What is the Required Timing

Summaries must be provided when an employer or individual requests information about a plan, applies for coverage or enrolls in
a plan. They must also receive a summary if there are plan changes or if the individual has a HIPAA special enrollment event that prompts a new enrollment opportunity.

People enrolled in a health plan must be notified of any significant changes to the terms of coverage reflected in the Summary of
Benefits and Coverage at least 60 days prior to the effective date of the change. This timing applies only to changes that become effective during the plan or policy year but not to changes at renewal (the start of the new plan or policy year).

How Benefit Summaries will be Delivered

Summaries are required both before and after enrollment and may be delivered in paper and/or electronic format. There are
specific requirements for group vs. individual plans.

Penalty for Non-Compliance

The penalty for ‘willful’ non-compliance is up to $1,000 per enrollee for each failure to comply.

Next Steps

Comments on this proposed rule – including the specific request for expatriate plans – are due 60 days from the published date.

New HHS Guidelines for Women’s Preventative Services

 On Aug. 1, 2011, the Department of Health and Human Services (HHS) released new health  plan coverage   guidelines that will require health insurance plans to cover women’s preventive services such as well-  woman visits, domestic violence screening, and U.S. Food and Drug Administration (FDA)-approved contraception, without charging a copayment, coinsurance or a deductible.

Authorized under provisions of the Patient Protection and Affordable Care Act, these guidelines, developed by a committee of the Institute of Medicine of the National Academies, expand the previous list of preventive services that must be covered without charging a copayment, coinsurance or a deductible to include:

  • Well-woman visits
  • Screening for gestational diabetes for all pregnant women
  • Human papillomavirus DNA testing for all women 30 years and older
  • Annual sexually transmitted infection counseling for all sexually active women
  • Annual counseling and screening for HIV for all sexually active women
  • FDA-approved contraception methods, sterilization procedures and contraceptive counseling
  • Breastfeeding support, supplies, and counseling, including costs for renting breastfeeding equipment
  • Domestic violence screening and counseling

New health plans and non-grandfathered plans and issuers are required to provide coverage consistent with these guidelines in the first plan year (in the individual market, policy year) that begins on or after August 1, 2012.  It is possible that your current health plan covers these services now, but may have a copay or co-insurance percentage.

Government Changes Announced for Annual Limit Waivers for Mini-med Plans

The U.S. Department of Health and Human Services (HHS) recently announced new procedures for health plans with limited benefits (including so-called “mini-med” plans) to obtain temporary waivers of the restrictions on annual dollar limits that were imposed by the Patient Protection and Affordable Care Act.

Employers may adopt mini-med and similar health plans to provide limited health insurance coverage (for example, health benefits capped at $20,000 per year) to a segment of employees that otherwise would not have access to the employer’s standard health coverage.

Under the new procedures, previously granted waivers for mini-med and similar health plans are extended through 2013 if the applicants report certain information about their plans to HHS on an annual basis and disclose additional information to enrollees about the limits of their plans’ coverage. Recipients of existing waivers must apply to HHS to extend their waivers by September 22, 2011. Any plans that have not yet applied for waivers must also apply by September 22, 2011.

The Affordable Care Act generally prohibits group health plans from imposing lifetime and annual dollar limits on certain benefits, beginning with the first plan year that starts on or after September 23, 2010. The Affordable Care Act allows annual limits to be phased out gradually through 2014, with minimum annual limits of $750,000, $1.25 million, and $2 million for the 2011, 2012, and 2013 plan years, respectively.

As part of the transition process, HHS established in September 2010 a temporary program (for years prior to 2014) to permit individual mini-med and similar health plans to apply for a waiver of the restricted annual dollar limit if the plan could demonstrate that compliance with the annual dollar limit rules would result in either a significant decrease in access to benefits or a significant increase in premiums for the plan or policy. Under the original waiver program, the applicant needed to reapply for the waiver each year. The new procedures eliminate the annual reapplication process, but require applicants to take action by September 22, 2011, and satisfy certain additional requirements.

Dont Forget to Do Discrimination Testing!!

 Plan sponsors who forget to actually do discrimination testing run into all sorts of problems, including the possibility that their plan can be disqualified.

Employee health plans,  cafeteria plans and self-funded welfare benefit plans have to do annual discrimination testing to remain qualified. Insured health plans are not currently subject to  discrimination testing, but that will change in the future.

Size of the group doesn’t matter.

 To pass the Section 105(h) nondiscrimination rules an employer must meet two separate tests: The Benefits Test  and The Eligibility Test 

 The benefits test measures whether the plan is “offered in a manner that is discriminatory on its face” and whether the plan is operated “in a discriminatory manner.” All benefits provided for highly compensated employees (HCEs) must be provided for all other participants” and that “all the benefits available for the dependents of HCEs must also be available on the same basis for dependents of all non-HCE participants.” Required employee contributions must be the same for HCEs and non-HCEs for each benefit level and the same type of benefits that are available to HCEs must be available to non-HCEs. The “discrimination in operation” occurs, for example, if a plan added a benefit for a particular treatment for one plan year during which an HCE received coverage for that treatment, then terminated the benefits as soon as the HCE no longer needed the treatment.

For the Eligibilty Test, an employer passes the eligibility test if it passes any one of the three:

1. At least 70% of employees must benefit from the plan.

2.  All benefits provided for highly compensated employees (HCEs) must be provided for all other participants” and that “all the benefits available for the dependents of HCEs must also be available on the same basis for dependents of all non-HCE participants.”.

3. Required employee contributions must be the same for HCEs and non-HCEs for each benefit level and the same type of benefits that are available to HCEs must be available to non-HCEs. The “discrimination in operation” occurs, for example, if a plan added a benefit for a particular treatment for one plan year during which an HCE received coverage for that treatment, then terminated the benefits as soon as the HCE no longer needed the treatment. 

 Plans that fail will cause the employee benefits to become taxable as income.

Government to Reduce Premium, Ease Rules on Health Plans for Uninsured

The Federal Government will be making  health insurance more affordable and accessible for Americans who have been denied coverage because they are sick as part of Health Reform.   Premiums will be reduced for uninsured people with conditions such as cancer or diabetes.  Restrictions will also be relaxed on who may sign up for  preexisting condition insurance plans.

These plans were created by the health overhaul that President Obama signed last year. They are meant to provide temporary aid to sick Americans until 2014, when insurance companies will no longer be allowed deny coverage to people who are sick.

The number of people signing up for these plans has lagged, in part because of high premiums and stringent eligibility guidelines.  Premiums in some states could come down as much as 40%, thanks to a more refined analysis of what the plans should charge.

The administration is directly slashing premiums in the District of Columbia and most of the 23 states that have elected to have the federal government run their health plans. The remaining 27 states, which each run their own plans, will be able to reduce premiums, as well.

The administration will no longer require applicants for these plans to furnish a letter from an insurance company showing they had been denied coverage. Instead, applicants will need only a letter from a doctor, nurse or physician’s assistant stating they have a medical condition.  Applicants will still have to show they had been without coverage for at least six months.

The expansion of preexisting condition insurance plans is made possible by $5 billion that was set aside in the new law.  Because just 18,000 people nationwide had signed up for a plan, much of that has not been spent, according to the Department of Health and Human Services.

Additional information about signing up for a preexisting condition insurance plan is available at http://www.pcip.gov or by calling (866) 717-5826.

Federal Funding for Health Insurance Exchanges Repealed

 House Republicans voted on Tuesday to deny funding for a central element of the law that sets up marketplaces for people to shop for health insurance coverage.  The bill passed by the House of Representatives would rescind some $1.9 billion in grants that are being made available under the health care law to help states establish insurance exchanges where individuals and small businesses can shop for medical coverage plans.

Democratic Representative Frank Pallone said the effort to deny federal grants to the states would not kill the exchanges. Rather, it would make it harder for cash-strapped states to establish their own marketplaces and give more power to the federal government, Pallone said.

The health care law calls for the federal government to set up exchanges for states that fail to establish their own.

The nonpartisan Congressional Budget Office said the House bill would delay establishment of state exchanges and save $14.6 billion over the next 10 years mostly because fewer people would purchase government-subsidized insurance.

About 500,000 people would be without health coverage in 2015 because of the delay, CBO said in a recent analysis of the bill.