What is Next for Health Reform?

(Reuters) – One year ago, President Barack Obama signed into law a sweeping healthcare overhaul to fulfill a long-standing Democratic pledge to ensure healthcare coverage for all Americans.

Passage of the law was a major legislative victory for Obama and helped change the political landscape, but not always in the way Democrats had hoped. Republicans strongly opposed the law and successfully worked public skepticism about it into sweeping election victories in November.

Here’s a look at the uncertain future of the reform law.

REPEAL, DEFUND AND TAKE APART

Republicans, who say the law gives the federal government too much control and does little to reduce costs, have pushed a repeal bill through the U.S. House of Representatives after they took control in January. Full repeal, however, is unlikely unless Republicans successfully take control of the Senate and the White House in next year’s presidential elections.

The Democratic-led Senate will not go along with repeal and Obama would veto any such bill. Democrats argue the law’s reforms will slow the growth of healthcare costs while improving care and reducing the ranks of the uninsured.

A Republican move to withhold funds to stop implementation of the law will meet similar resistance from Senate Democrats.

That leaves Republicans the option of picking apart the law regulation by regulation. This strategy could be more successful.

Already, a revenue raising provision requiring businesses to file Internal Revenue Service forms on purchases and service totaling more than $600 a year is likely to be repealed with support from both parties.

The bill passed the House, and the Senate is expected to follow. The bill adjusts insurance purchase subsidies for middle income people as a way to cover the $22 billion cost of rescinding the so-called 1099 reporting provision.

COURT CHALLENGES

A number of states have challenged the constitutionality of the law’s requirement that most Americans obtain health insurance or pay a penalty. The rulings have been divided, and the issue is certain to end up before the U.S. Supreme Court.

A U.S. District Court judge in Florida ruled the entire law unconstitutional, while a U.S. judge in Virginia ruled the insurance mandate unconstitutional and upheld the rest of the law. Other courts have dismissed cases or have found the law’s mandate to purchase insurance constitutional.

The U.S. Supreme Court could decide as early as next year. Senate Finance Committee Chairman Max Baucus, who played a leading role in writing the healthcare law, and other healthcare advocates believe the law will be upheld.

Conservative critics give better than even odds that the Supreme Court will overturn the law.

If the court does decide that the coverage mandate violates the Constitution, many experts believe the judges would most likely strike down just that provision and leave the rest of the law intact.

A decision striking down the purchase mandate but leaving intact provisions requiring insurers to cover everyone regardless of medical history would wreak havoc on the insurance industry and send premiums soaring.

The law’s major provisions establishing state insurance exchanges, imposing coverage mandates and requirements that insurers can no longer exclude or charge more for preexisting conditions take effect in 2014. That would give lawmakers time to act on any court decision.

STATE ISSUES

Despite the court challenges and stiff Republican opposition, the federal government is moving ahead with implementation that mostly falls on the states.

A number of state governors, primarily Republicans, have balked at the added cost of the law to already tight budgets. States must set up insurance exchanges to help consumers and small businesses purchase insurance. States also have to maintain their Medicaid coverage for the poor until the program is expanded in 2014 to cover millions more low income people.

The Medicaid healthcare program is run by the states with federal financial aid, and many governors are looking to cut Medicaid spending to help balance budgets that took a huge hit during the economic recession.

The federal government will pick up the cost of expanded Medicaid coverage for three years, but many states worry about future added costs.

Some states are dragging their feet on establishing the insurance exchanges that are to go into effect in 2014, leaving it to the federal government to step in and operate them.

SAVING THE HEALTHCARE LAW

Democrats note the popular Social Security retirement and Medicare healthcare programs for the elderly also faced stiff political opposition from conservative Republicans and survived legal challenges.

If the healthcare law survives the constitutional challenge, most likely the current political opposition will begin to subside and the law will remain on the books.

Most Americans did not think the costly U.S. healthcare system was working well before the new law. Costs were soaring and millions were going without coverage.

Polling data show that while people are skeptical about the law, most do not want to see it scrapped entirely.

Republicans have yet to put forward a proposal to replace the current law and are not likely to take a comprehensive approach. Instead they most likely would take it step-by-step, starting with limits on medical malpractice lawsuits. They also would push to allow insurers, who are regulated at the state level, to sell policies across state lines.

© Thomson Reuters 2009 All rights reserved

EDD Reporting Changes

As of January 1, 2011, the Employment Development Department (EDD) is requiring annual reports to be submitted on a quarterly basis. This change will allow EDD and employers to identify overpayments and any amounts due more quickly, which will result in faster refunds.

What’s Changing

DE-6 and DE-7 forms have been replaced by new DE-9 and DE-9C forms.

  • DE- 9  (formerly form DE-6) Quarterly Contribution Return and Report of Wages Form
    Employers will use this form to report Unemployment Insurance, Disability Insurance, taxable wages and contributions
  • DE-9C (formerly from DE-7) Quarterly Contribution Return and Report of Wages Continuation Form
    Employers use this form to report employee wages and personal income tax withheld

For additional information, please visit the links below:

For FAQ’s regarding Payroll tax changes in 2011, click here.
http://www.edd.ca.gov/Payroll_Taxes/FAQ_-_2011_Payroll_Tax_Reporting_Changes.htm

To download Payroll tax forms and instructions, click here.
http://www.edd.ca.gov/Payroll_Taxes/Forms_and_Publications.htm#Forms

Compromise Offered on Health Reform

 In an effort to curb rising dissatifaction and revolt by individual states, President Obama offered a compromise on Monday to states struggling to implement his health care law, offering support for a proposal that would give them some flexibility in carrying out its key parts.The Patient Protection and Affordable Care Act (PPACA) originally was designed  to lower costs and extend coverage to millions of uninsured Americans.  The law has divided Democrats and Republicans and handed states – more than half of which are suing over its constitutionality – a handful of bureaucratic challenges. The president acknowledged those issues during a meeting with state governors at the White House on Monday.  President Obama emphasized a part of the law that would allow states to tailor their own solutions to health care reform in 2017 if they fulfilled the same goals created by PPACA. “If your state can create a plan that covers as many people as affordably and comprehensively as the Affordable Care Act does – without increasing the deficit – you can implement that plan,” Obama told the governors. “And we’ll work with you to do it,” he said. 

More than half of the 50 states are suing to stop the plan in federal court, saying it usurps individuals’ and states’ rights, making it mandatory to purchase insurance coverage or pay penalties.

States must carry out many of the reforms, including establishing exchanges where individuals can buy health insurance. PPACA made more people eligible for Medicaid, the health care program for the poor that states operate with partial reimbursements from the federal government. When states balked at the huge price tag of larger Medicaid rolls, Congress agreed to pay 100% of the costs for new enrollees. Manystates are still concerned that they cannot afford to implement the plan after the financial crisis and recession induced an historic collapse in many states’ revenues. Additionally, Medicaid costs are rising as large numbers of laid-off workers turn to it for assistance (Medicaid on average takes up a third of states’ budgets).  Obama asked the governors to create a bipartisan commission to study ways to bring down costs. 

 Last week, the Health and Human Services Department announced a variety of grant programs to help fund state programs to review health insurance rates, pay for the administration of insurance regulation, and provide home healthcare to Medicaid enrollees.

Health Reform – The Fighting Continues!

Health Reform – The Fighting Continues!

 Republicans, with their newly won control of the House of Reprsentatives,  would seem to pose the greatest threat to the health reform law.  They’ve already passed a repeal bill, threatened to defund implementation, and begun holding hostile hearings. Despite these  moves, the biggest threat to the law may come from the judiciary. Two weeks ago, a Florida federal district court ruled the entire law invalid. While the decision is unlikely to have any immediate impact, it represents the second judicial ruling against health reform and makes an eventual Supreme Court decision striking down the law seem more plausible than most would have thought when President Obama signed the bill last year.

Four district courts have now heard challenges to the law, with two upholding the law and two ruling against it. Naturally, the judges deciding in favor of the law were both appointed by Democrats and the two ruling against it were appointed by Republicans. In all of the cases the central issue is the constitutionality of the individual mandate. Although the mandate’s infringement of personal liberty is what most upsets mandate opponents, the question the courts have focused on is the more mundane one of whether the mandate falls within the scope of the federal government’s power to regulate interstate commerce.

Under the Constitution, the federal government has only those powers specifically granted to it in that document, one of which is the power to regulate interstate commerce – known as the “Commerce Clause.” This authority has in the past provided the legal basis for a wide range of federal legislation. A key argument of the plaintiffs in the health reform legal challenges is that declining to purchase health insurance, which the federal government would penalize under the law, can’t be considered commerce because it doesn’t constitute activity of any kind. Someone who chooses not to buy health coverage is not engaging in commercial activity, they argue, and so is beyond the reach of the government’s regulatory powers under the Commerce Clause. In defense of the law, the government has argued that an individual’s failure to purchase coverage is economic activity because it’s a unique commodity.  Not buying coverage, they say, results in other Americans picking up the cost of their health expenses when they receive uncompensated care at an emergency room. Thus, failure to purchase coverage disrupts insurance pooling arrangements, causing higher costs for others, and so does represent commercial activity. 

A secondary, but hugely consequential, issue in these cases is what should happen to the rest of the law in the event that the mandate is deemed unconstitutional. On this point, the two courts ruling against the law parted company. Prior to the Florida court ruling, a Virginia District court found the mandate unconstitutional but also ruled that the rest of the law, including guarantee-issue and the other market reform provisions, should stand. Going way beyond his Virginia colleague, the Florida judge ruled the entire law invalid since it did not contain a severability clause – specific language stating that its provisions were severable and that if one should be stricken the others should nevertheless take effect.

The cases decided so far and others yet to come are all just a run-up to the final action, which will likely come within one to two years when the Supreme Court has its say on the matter. Unless and until the Supreme Court overturns any of its provisions, health reform will remain law.

We will keep you informed of any new developments.

Do Dental and Vision Plans Have to Cover Dependents to Age 26?

According to the Department of Health and Human Services (HHS)  the Department’s position that if benefits are “excepted  benefits” under HIPAA, the PPACA’s group health plan mandates and insurance  market reform requirements (e.g., no lifetime dollar limits on essential  health benefits, only “restricted” annual dollar limits on essential health benefits prior to 2014, no annual dollar limits on essential health benefits in 2014 and beyond, extended plan eligibility for adult children up to age 26, no waiting periods in excess of 90 days [effective 2014], insured health plan nondiscrimination rules, new internal claims and appeals/external review  processes) do not apply. 
 
A dental or vision benefit plan is a HIPAA-excepted benefit if it is:

 *Provided under a separate policy, certificate or contract of insurance (for insured plans)

 * Is otherwise not an integral part of the health care plan.
 For dental or vision benefits to be considered not an integral part of the plan (whether insured or self-insured), participants must have a right not to  receive the coverage and, if they do elect to receive the coverage, must pay
an additional premium  Accordingly, if a plan provides its dental or vision benefits pursuant to a
separate election by a participant and the plan charges even a nominal employee contribution toward the coverage, the dental or vision benefits would constitute excepted benefits, and the PPACA group health plan mandates and insurance market reform provisions would not apply to that coverage.

To put this in “plain english”  If the dental and vision plans are provided by a separate carrier than the medical and if an employee can make a separate election and premium payment for the dental and vision without having to have these benefits mirror the medical,  then the carrier does not have to offer dependent benefits to age 26.  Many dental and vison carriers are offering to continue benefits to age 26 as a courtesy, please check with the carrier to determine their position.

PPACA Mandates Refresher

There have been a great deal of news coverage regarding the Patient Protection and Affordable Care Act (PPACA) and possible changes to the law.  We dont know yet how the laws  yet to be implemented will be effected,  we will keep you posted.  Below are some of the key mandates and provisions of the laws that have alreadybeen implementedfor employers and employees thus far:

 Grandfathered Health Plans

The term “grandfathered plan” means an employer-sponsored health plan that was in existence on March 23, 2010. Grandfathered plans are exempt from some, but not all, of PPACA’s requirements. Employers can lose this grandfathered status if they make plan changes that significantly cut benefits or increase costs for employees. Employers with group health plans may change insurance carriers and still maintain their grandfathered status.

 Breaks for Nursing Mothers

Employers are to provide nursing mothers with reasonable breaks to express breast milk for their nursing children. Employers are required to provide these breaks for up to one year after a child’s birth and the breaks need not be paid. Employers are also required to provide a private space for expressing milk, other than a bathroom. 

 Age-26 Mandate and Pre-existing Conditions for Children

Effective with the first plan year beginning on or after September 23, 2010, employers providing dependent coverage are required to cover their employees’ adult children up to age 26, regardless of whether the child is a student, resides with the participant or is declared as a dependent on a parent’s income tax return. This provision does not apply to dependents that are eligible under another group plan. In addition, group health plans are not allowed to deny coverage to children under age 19 with pre-existing conditions.

 Rescission

Employer health plans are now prohibited from retroactively rescinding or canceling health care coverage, except in the case of fraud or intentional misrepresentation.

 Preventive Care Changes

Beginning in 2011, health plans are required to provide certain preventive care services without cost sharing, including some immunizations and annual or preventive exams for adults, infants, children and teens. In addition, patients can no longer be required to obtain authorization from a primary care physician before seeing an obstetrician or gynecologist.

 Lifetime and Annual Limits

Employer-provided coverage is now required to eliminate lifetime limits on essential benefits coverage, and may only place “restricted” annual limits on essential benefits for the time being.

 Over-the-Counter Medications

Beginning January 2011, individuals may no longer use funds from their Flexible Spending Accounts (FSAs), Health Savings Accounts (HSAs) or Health Reimbursement Arrangements (HRAs) for over-the-counter (OTC) medications unless prescribed. 

 HSA Penalty Increased

Effective January 2011, PPACA increases the penalty for withdrawing pretax funds from an HSA for non-eligible expenses from 10% to 20% in an effort to discourage unauthorized use.

Small Business Tax Credit

Health care reform provides for a tax credit for small businesses (those with fewer than 25 full-time employees and average wages less than $50,000) that provide employer-sponsored health insurance to their employees. Employers were able to apply for this credit beginning in 2010.

 Medical Loss Ratios

Beginning January 2011, health insurance companies are required to spend at least 80% to 85% (depending on the plan’s size) of premiums on medical care and quality improvements for patients.

 Health Insurance Exchanges

While exchanges are not required to be in operation until 2014, state health insurance exchanges have already received much attention. Many states have started to implement a state-wide insurance exchange system.