Archive for the ‘COBRA’ Category

The unintended impact of Congress slashing Medicare payments

Thursday, June 17th, 2010

This came from a very large health insurance company’s agent newsletter which was sent out yesterday. Note the very last sentence and the impact on the cost on health insurance.

Note: Part of the selling point of the new Patient Protection and Affordable Care Act was keeping this reduction in Medicare payments to pay for the reform.

<snip>

Medicare Program Halts Processing of Physician Claims after Congress Misses Deadline to Avert Large Cuts in Medicare Physician Payments
The Centers for Medicare & Medicaid Services (CMS) has notified physicians that it will delay processing Medicare claims until June 14 in order to temporarily avert a 21.3 percent reduction in Medicare physician payment rates that became effective June 1. Congress is expected to pass legislation the week of June 14 (mentioned above) to retroactively delay the Medicare physician payment reduction.

If a large reduction in Medicare physician payments is allowed to take effect, physicians would likely seek higher reimbursement from private insurers in order to offset the decrease in their Medicare reimbursement. <snip>

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Health Reform’s Consequences – The Good, The Bad, The UGLY!!!

Monday, June 14th, 2010

June 14, 2010 by Robert Slayton

I sure hope you like roller coasters . . .

The Good

Due to the Patient Protection and Affordable Care Act (PPACA) of 2010, Golden Rule (as of the middle of May) will allow children on their parent’s plan with no pre-existing condition exclusions or riders. Assurant (as of June 7^th) has allowed children under the age of 19 to be covered on their parent’s medical plan with no pre-existing conditions. Humana is guaranteed issue for children. All other carriers are required to make this change as of 9/23/2010.

The Bad

The aforementioned children can be subject to a rate increase on all. This means the insurance company will charge a higher premium for children who, actuarially speaking, will cost them more money (i.e. from medications taken and/or higher than average medical costs). Parents will be excited to see their children covered, but will probably not like the final premium charged. Golden Rule and Assurant still reserve the right to deny coverage to those children while Humana can place exclusion riders (meaning they can exclude certain conditions from coverage) on children until 9/23/2010.

I also received the first word of it late last week from Golden Rule (aka United HealthOne, a subsidiary of United Healthcare) and today from Assurant. Commissions will be cut on all business written from July 1, 2010 onward. They don’t know by how much, but Golden Rule and Assurant sent a letter to all agents alerting them of this change. This is due to the requirement that they meet the Minimum Loss Ratio (MLR) goals set in the PPACA (80% for individual and small groups, 85% for large groups). It will be the individual health insurance carriers that will get hit the hardest. Get ready for mergers, jumps in premium pricing, aggressive selling of ancillary products (dental/vision/accident. etc) which are not subject to the MLR, and insurance carriers getting out of the individual market over the next couple of years.

For years now the commissions for insurance agents have gotten smaller and smaller. At the same time the burden of complying will new laws, reporting, and paperwork, both for our own agencies and our clients has caused us to do more for less. This means that marginal insurance agents’ service levels will drop and it will be harder than ever to get through to your agent for questions or help with claims.

Couple this with both state and national administrations who vilify the industry (lumping agents in with the insurance companies, even though we are client advocates more than anything else) and you get an industry that is in a state of flux. I wouldn’t be surprised if the smaller agencies will be snapped up by mega-large corporations much like the small farms have gone away once the price for crops dropped (Note that this is only conjecture at this point).

The Ugly

I confirmed with a Humana employee that they are laying off 5% of their workforce. This means, one thousand, four hundred and five (1405 based upon their 2009 annual report) high paying jobs gone, thanks to reform. This caused one of my group’s renewals to take twice as long to be processed and it was processed wrong, causing countless hours trying to fix the problem, manage employees who didn’t get their cards in a timely fashion, and manage all the damage to my reputation that this caused.

Blue Cross Blue Shield of Illinois will only grant effective dates of the first or 15^th of the month on its individual products (probably a good thing), but has suspended individual members’ ability to downgrade their policies (e.g. choosing a higher deductible for a lower premium) at any time.

Furthermore, rates for micro groups have gone haywire with BCBS’s underwriting. Before PPACA, if I wrote a 4 employee group, I could expect the final rate to be around 10% higher for a relatively healthy group. Lately, those rates have been coming back at 40% – 50% higher. [Note: Groups under 50 are subject to underwriting based upon the medical health of their employees. Insurance companies can choose to keep the quoted rate the same or rate the entire group up to 67% higher than the quote based upon the health of the group]. I’ve taken the same set of applications to BCBS and 3 other carriers. BCBS is an expected 45% rate increase, the second company was 15% rate increase, and the final two carriers were a 0% rate increase.

Final Thoughts

Personally, I love the business of health insurance, using a consultative model to assist clients (both individuals and businesses) find the best coverage for the best rate. It is fun looking at creative options that benefit both the employer and employee yet still retain high quality coverage and educating clients on the market, trends, and impacts of new laws. My clients are interesting, funny, and committed to their businesses. As they grow, I grow with them. As they experience downturns, so do I. We share leads, tips, and other information.

As the rules are written for the 2400 page tome plus 153 page sidecar bill of the PPACA, it is safe to say that all the rules are changing. Nobody really knows how this new law will turn out as the rules are the interpretation of the law, so without the rules, nobody can say definitively what is intended. Couple this with elections this year and we’ve got ourselves the biggest roller coaster ride of our generation. At this point in time, all we can do is to hold on, keep up with the changes, and try to have our words heard by our legislators.

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Tags: health care reform, Obamacare, Patient Protection and Affordable Care Act, ppaca, tea party
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H.R. 4872, THE HEALTH CARE & EDUCATION AFFORDABILITY RECONCILIATION ACT of 2010 Section by Section Analysis

Monday, March 22nd, 2010

Now that Congress has passed the most sweeping coverage in over a generation. Here is a section by section analysis of the bill. For a nice piece on when certain sections of health reform will be effective, see this article from the New York Times: http://nyti.ms/a4Fc8B

March 22, 2010

Title I – Coverage, Medicare, Medicaid and Revenues

Subtitle A – Coverage

Sec. 1001. Affordability. Improves the financing for premiums and cost sharing for individuals with incomes up to 400% of the federal poverty level. Subsection (a) improves tax credits to make premiums more affordable as a percent of income; and subsection (b) improves support for cost sharing, focusing on those with incomes below 250% of the federal poverty level. Starting in 2019, constrains the growth in tax credits if premiums are growing faster than the consumer price index, unless spending is more than 10% below current CBO projections.

Sec. 1002. Individual responsibility. Modifies the assessment that individuals who choose to remain uninsured pay in three ways: (a) exempts the income below the filing threshold, (b) lowers the flat payment from $495 to $325 in 2015 and from $750 to $695 in 2016 and (c) raises the percent of income that is an alternative payment amount from 0.5 to 1.0% in 2014, 1.0 to 2.0% in 2015, and 2.0 to 2.5% for 2016 and subsequent years to make the assessment more progressive.

Sec. 1003. Employer responsibility. Improves the transition to the employer responsibility policy for employers with 50 or more full-time equivalent workers (FTE) by subtracting the first 30 full time employees from the payment calculation (e.g., a firm with 51 workers that does not offer coverage will pay an amount equal to 51 minus 30, or 21 times the applicable per employee payment amount). The provision also changes the applicable payment amount for firms with more than 50 FTEs that do not offer coverage to $2,000 per full-time employee. It also eliminates the assessment for workers in a waiting period, while maintaining the 90-day limit on the length of any waiting period beginning in 2014.

Sec. 1004. Income definitions. Modifies the definition of income that is used for purposes of subsidy eligibility and the individual responsibility requirement. The modifications conform the income definition to information that is currently reported on the Form 1040 and to the present law income tax return filing thresholds. The provision also extends the exclusion from gross income for employer provided health coverage for adult children up to age 26.

Sec. 1005. Implementation funding. Provides $1 billion to the Secretary of Health and Human Services to finance the administrative costs of implementing health insurance reform.

Subtitle B – Medicare

Sec. 1101. Closing the Medicare prescription drug “donut hole”. Provides a $250 rebate for all Medicare Part D enrollees who enter the donut hole in 2010. Builds on pharmaceutical manufacturers’ 50% discount on brand-name drugs beginning in 2011 to completely close the donut hole with 75% discounts on brand-name and generic drugs by 2020.

Sec. 1102. Medicare Advantage payments. Freezes Medicare Advantage payments in 2011. Beginning in 2012, the provision reduces Medicare Advantage benchmarks relative to current levels. Benchmarks will vary from 95% of Medicare spending in high-cost areas to 115% of Medicare spending in low-cost areas. The changes will be phased-in over 3, 5 or 7 years, depending on the level of payment reductions. The provision creates an incentive system to increase payments to high-quality plans by at least 5%. It also extends CMS authority to adjust risk scores in Medicare Advantage for observed differences in coding patterns relative to fee-for-service.

Sec. 1103. Savings from limits on MA plan administrative costs. Ensures Medicare Advantage plans spend at least 85% of revenue on medical costs or activities that improve quality of care, rather than profit and overhead.

Sec. 1104. Disproportionate share hospital (DSH) payments. Advances Medicare disproportionate share hospital cuts to begin in fiscal year 2014 but lowers the ten-year reduction by $3 billion.

Sec. 1105. Market basket updates. Revises the hospital market basket reduction that is in addition to the productivity adjustment as follows: -0.3 in FY14 and -0.75 in FY17, FY18 and FY19. Removes Senate provision that eliminates the additional market basket for hospitals based on coverage levels. Providers affected are inpatient hospitals, long-term care hospitals, inpatient rehabilitation facilities, psychiatric hospitals and outpatient hospitals.

Sec. 1106. Physician ownership-referral. Changes to December 31, 2010 the date after which physician ownership of hospitals to which they self refer is prohibited and provides a limited exception to the growth restrictions for grandfathered physician owned hospitals that treat the highest percentage of Medicaid patients in their county (and are not the sole hospital in a county).

Sec. 1107. Payment for Imaging Services. Sets the assumed utilization rate at 75 percent for the practice expense portion of advanced diagnostic imaging services.

Subtitle C – Medicaid

Sec. 1201. Federal funding for States. Strikes the provision for a permanent 100% federal matching rate for Nebraska for the Medicaid costs of expansion populations. Provides federal Medicaid matching payments for the costs of services to expansion populations at the following rates in all states: 100% in 2014, 2015, and 2016; 95% in 2017; 94% in 2018; 93% in 2019; and 90% thereafter. In the case of expansion states, reduces the state share of the costs of covering nonpregnant childless adults by 50% in 2014, 60% in 2015, 70% in 2016, 80% in 2017, 90% in 2018. In 2019 and thereafter, expansion states would bear the same state share of the costs of covering nonpregnant childless adults as non-expansion states (e.g., 7% in 2019, 10% thereafter).

Sec. 1202. Payments to primary care physicians. Requires that Medicaid payment rates to primary care physicians for furnishing primary care services be no less than 100% of Medicare payment rates in 2013 and 2014 (the first year of the Senate bill’s Medicaid coverage expansion to all individuals with incomes under 133% of poverty). Provides 100% federal funding for the incremental costs to States of meeting this requirement.

Sec. 1203. Disproportionate share hospital payments. Lowers the reduction in federal Medicaid DSH payments from $18.1 billion to $14.1 billion and advances the reductions to begin in fiscal year 2014. Directs the Secretary to develop a methodology for reducing federal DSH allotments to all states in order to achieve the mandated reductions. Extends through FY 2013 the federal DSH allotment for a state that has a $0 allotment after FY 2011.

Sec. 1204. Funding for the territories. Increases federal funding in the Senate bill for Puerto Rico, Virgin Islands, Guam, American Samoa, and the Northern Marianas Islands by $2 billion. Raises the caps on federal Medicaid funding for each of the territories. Allows each territory to elect to operate a Health Benefits Exchange.

Sec. 1205. Delay in Community First Choice Option. Postpones from October 1, 2010 until October 1, 2011 the effective date of the option established for State Medicaid programs to cover attendant care services and supports for individuals who require an institutional level of care

Sec. 1206. Drug rebates for new formulations of existing drugs. For purposes of applying the additional rebate, narrows the definition of a new formulation of a drug to a line extension of a single source or innovator multiple source drug that is an oral solid dosage form of the drug.

Subtitle D – Reducing Fraud, Waste, and Abuse

Sec. 1301. Community Mental Health Centers. Establishes new requirements for community mental health centers that provide Medicare partial hospitalization services in order to prevent fraud and abuse.

Sec. 1302. Medicare prepayment medical review limitations. Streamlines procedures to conduct Medicare prepayment reviews to facilitate additional reviews designed to reduce fraud and abuse.

Sec. 1303. CMS-IRS data match to identify fraudulent providers. Allows the Secretary of Treasury to share IRS data with HHS employees to help screen and identify fraudulent providers or providers with tax debts, and to help recover such debts. Provides strict controls on the use of such information to protect taxpayer privacy.

Sec. 1304. Funding to fight fraud, waste and abuse. Increases funding for the Health Care Fraud and Abuse Control Fund by $250 million over the next decade. Indexes funds to fight Medicaid fraud based on the increase in the Consumer Price Index.

Sec. 1305. 90-day period of enhanced oversight for initial claims of DME suppliers. Requires a 90-day period to withhold payment and conduct enhanced oversight in cases where the HHS Secretary identifies a significant risk of fraud among DME suppliers.

Subtitle E – Revenues

Sec. 1401. High-cost plan excise tax. Reduces the revenue collected by the tax by 80 percent. This is achieved by: delaying the application of the tax until 2018, which gives the plans time to implement and realize the cost savings of reform; increasing the dollar thresholds to $10,200 for single coverage and $27,500 for family coverage ($11,850 and $30,950 for retirees and employees in high risk professions); excluding stand-alone dental and vision plans from the tax; and permitting an employer to reduce the cost of the coverage when applying the tax if the employer’s age and gender demographics are not representative of the age and gender demographics of a national risk pool. Under the modified provision, the dollar thresholds are indexed to inflation and the dollar thresholds are automatically increased in 2018 if CBO is wrong in its forecast of the premium inflation rate between now and 2018.

Sec. 1402. Medicare tax. Modifies the tax to include net investment income in the taxable base. Currently, the Medicare tax does not apply to net investment income. The Medicare tax on net investment income does not apply if modified adjusted gross income is less than $250,000 in the case of a joint return, or $200,000 in the case of a single return. Net investment income is interest, dividends, royalties, rents, gross income from a trade or business involving passive activities, and net gain from disposition of property (other than property held in a trade or business). Net investment income is reduced by properly allocable deductions to such income.

Sec. 1403. Delay of the annual limitation on contributions to a health FSA. Delays the provision by two years until 2013.

Sec. 1404. Brand name pharmaceuticals. Delays the industry fee on sales of brand name pharmaceuticals for use in government health programs by one year to 2011, and increases revenue raised by the fee by $4.8 billion.

Sec. 1405. Excise tax on medical device manufacturers. Delays the tax by two years to 2013 and converts the industry fee to an excise tax on the first sale for use of medical devices at a rate of 2.9 percent. Exempts from the tax Class I medical devices, eyeglasses, contact lenses, hearing aids, and any device of a type that is generally purchased by the public at retail for individual use.

Sec. 1406. Health insurance providers. Delays the industry fee by 3 years to 2014 and modifies the annual industry fee for revenue neutrality. In the case of tax-exempt insurance providers, provides that only 50 percent of their net premiums that relate to their tax-exempt status are taken into account in calculating the fee. Provides exemptions for voluntary employee benefit associations (VEBAs) and nonprofit providers more than 80 percent of whose revenues is received from Social Security Act programs that target low income, elderly, or disabled populations.

Sec. 1407. Delay of elimination of deduction for expenses allocable to Medicare part D subsidy. Delays the provision by two years to 2013.

Sec. 1408. Elimination of unintended application of cellulosic biofuel producer credit. Adds an additional revenue provision. In 2008, Congress enacted a $1.01 per gallon tax credit for the production of biofuel from cellulosic feedstocks in order to encourage the development of new production capacity for biofuels that are not derived from food source materials. Congress is aware that some taxpayers are seeking to claim the cellulosic biofuel tax credit for unprocessed fuels, such as black liquor. The provision would limit eligibility for the tax credit to processed fuels (i.e., fuels that could be used in a car engine or in a home heating application).

Sec. 1409. Codification of economic substance doctrine and penalties. Adds an additional revenue provision. The economic substance doctrine is a judicial doctrine that has been used by the courts to deny tax benefits when the transaction generating these tax benefits lacks economic substance. The courts have not applied the economic substance doctrine uniformly. The provision would clarify the manner in which the economic substance doctrine should be applied by the courts and would impose a penalty on understatements attributable to a transaction lacking economic substance.

Sec. 1410. Time for payment of corporate estimated taxes. Provides for a one-time adjustment to corporate estimated taxes for payments made during calendar year 2014.

Sec. 1411. No impact on Social Security trust funds. Provides that Title II of the Social Security Act (the old age, survivor, and disability benefits program (OASDI)) is not amended or modified by the bill.

Subtitle F – Other Provisions

Sec. 1501. TAA for communities. Appropriates $500 Million a year for fiscal years 2010 through 2014 in the Community College and Career Training Grant program for community colleges to develop and improve educational or career training programs. Ensures that each state receives at least 0.5 percent of the total funds appropriated.

Title II – Health, Education, Labor, and Pensions

Subtitle A – Education

Section 2001. Short Title; References. Provides that this subtitle may be cited as the “SAFRA Act,” and that, except as otherwise provided, whenever an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Higher Education Act of 1965.

Part I-Investing in Students and Families

Section 2101. Federal Pell Grants. Amends the Higher Education Act to include mandatory funding for the Pell Grant. This provides additional mandatory funding to augment funds appropriated to increase the federal maximum Pell Grant award by the change in the Consumer Price Index. The mandatory component of the funding is determined by inflating the previous year’s total and subtracting the maximum award provided for in the appropriations act for the previous year or $4860, whichever is greater. Beginning in the 2018-2019 academic year, the maximum Pell award will be at the 2017-2018 level.

Section 2102. Student Financial Assistance. This section provides $13.5 billion in mandatory appropriations to the Federal Pell Grant program.

Section 2103. College Access Challenge Grant Program. This section amends section 786 of the Higher Education Act by authorizing and appropriating $150 million for fiscal years 2010 through 2014 for the College Access Challenge Grant program created under the College Cost Reduction and Access Act of 2007. Provides that the allotment for each State under this section for a fiscal year shall not be an amount that is less than 1.0 percent of the total amount appropriated for a fiscal year.

Section 2104. Investment in Historically Black Colleges and Universities and Minority Serving Institutions. This section amends section 371(b) of the Higher Education Act by extending funding for programs under this section created under the College Cost Reduction and Access Act of 2007 for programs at Historically Black Colleges and Universities and minority-serving institutions through 2019, including programs that help low-income students attain degrees in the fields of science, technology, engineering or mathematics by the following annual amounts: $100 million to Hispanic Serving Institutions, $85 million to Historically Black Colleges and Universities, $15 million to Predominantly Black Institutions, $30 million to Tribal Colleges and Universities, $15 million to Alaska, Hawaiian Native Institutions, $5 million to Asian American and Pacific Islander Institutions, and $5 million to Native American non-tribal serving institutions.

Part II-Student Loan Reform

Section 2201. Termination of Federal Family Education Loan Appropriations. This section terminates the authority to make or insure any additional loans in the Federal Family Education Loan program after June 30, 2010.

Section 2202. Termination of Federal loan Insurance Program. This section is a conforming amendment with regard to the termination of the FFEL program, limiting Federal insurance to those loans in the Federal Family Education Loan program for loans first disbursed prior to July 1, 2010.

Section 2203. Termination of Applicable Interest Rates. This section makes a conforming amendment with regard to the termination of the FFEL program limiting interest rate applicability to Stafford, Consolidation, and PLUS loans to those loans made before July 1, 2010.

Section 2204. Termination of Federal payments to Reduce Student Interest Costs. This section makes a conforming amendment with regard to the termination of the FFEL program by limiting subsidy payments to lenders for those loans for which the first disbursement is made before July 1, 2010.

Section 2205. Termination of FFEL PLUS Loans. This section makes a conforming change with regard to the termination of the FFEL program for federal PLUS loans by prohibiting further FFEL origination of loans after July 1, 2010.

Section 2206. Federal Consolidation Loans. This section makes conforming changes with regard to the termination of the FFEL program for federal consolidation loans. This section also provides that, for a 1 year period, borrowers who have loans under both the Direct Lending program and the FFEL program, or who have loans under either program as well as loans that have been sold to the Secretary, may consolidate such loans under the Direct Lending program regardless of whether such borrowers have entered repayment on such loans.

Section 2207. Termination of Unsubsidized Stafford loans for Middle-Income Borrowers. This section makes conforming changes with regard to the termination of the FFEL program for Unsubsidized Stafford loans by prohibiting further FFEL origination of loans after July 1, 2010.

Section 2208. Termination of Special Allowances. This section makes conforming changes with regard to the termination of the FFEL program by limiting special allowance payments to lenders under the FFEL program to loans first disbursed before July 1, 2010.

Section 2209. Origination of Direct Loans at Institutions Outside the United States. This section provides for the origination of federal Direct Loans at institutions located outside of the United States, through a financial institution designated by the Secretary.

Section 2210. Conforming amendments. This section makes conforming technical changes with regard to the termination of the FFEL program for Department of Education agreements with Direct Lending institutions.

Section 2211. Terms and Conditions of Loans. This section makes conforming technical changes with regard to the termination of the FFEL program to clarify the terms and conditions of Direct Loans.

Section 2212. Contracts. This section directs the Secretary to award contracts for servicing federal Direct Loans to eligible non-profit servicers. In addition, this section provides that for the first 100,000 borrower loan accounts, the Secretary shall establish a separate pricing tier. Specifies that the Secretary is to allocate the loan accounts of 100,000 borrowers to each eligible non-profit servicer. The section also permits the Secretary to reallocate, increase, reduce or terminate an eligible non-profit servicer’s allocation based on the performance of such servicer. In addition, this section appropriates mandatory funds to the Secretary to be obligated for administrative costs of servicing contracts with eligible non-profit servicers. This section also requires the Secretary to provide technical assistance to institutions of higher education participating or seeking to participate in the Direct Lending program. This section appropriates $50 million for fiscal year 2010 to pay for this technical assistance. Additionally, this section authorizes the Secretary to provide payments to loan servicers for retaining jobs at location in the United States where such servicers were operating on January 1, 2010. This section appropriates $25,000,000 for each of fiscal years 2010 and 2011 for such purpose.

Section 2213. Agreements with State-Owned Banks. This section amends Part D of Title IV to direct the Secretary to enter into an agreement with an eligible lender for the purpose of providing Federal loan insurance on student loans made by state-owned banks.

Section 2214. Income-Based Repayment. The section amends the Income-Based Repayment program to cap student loan payments for new borrowers after July 1, 2014 to 10% of adjusted income, from 15% percent, and to forgive remaining balances after 20 years of repayment, from 25 years.

Subtitle B – Health

Sec. 2301. Insurance Reforms. Extends the prohibition of lifetime limits, prohibition on rescissions, and a requirement to provide coverage for non-dependent children up to age 26 to all existing health insurance plans starting six months after enactment. Starting in 2014, extends the prohibition on excessive waiting periods to existing health plans. For group health plans, prohibits pre-existing condition exclusions in 2014 (for children, they are prohibited starting six months after enactment), restricts annual limits beginning six months after enactment, and prohibits them starting in 2014. For coverage of non-dependent children prior to 2014, the requirement on group health plans is limited to those adult children without an employer offer of coverage.

Sec. 2302. Drugs Purchased by Covered Entities. Repeals the underlying 340B expansion to inpatient drugs and exemptions to GPO exclusion. Exempts orphan drugs from required discounts for new 340B entities.

Sec. 2303. Community Health Centers. Increases mandatory funding for community health centers to $11 billion over five years (FY 2011 – FY 2015).

Prepared by Committees on Ways & Means, Energy & Commerce, and Education & Labor, March 18, 2010

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New Fact Sheet on COBRA State Continuation Stimulus for Illinois

Tuesday, December 29th, 2009

Please find the original at http://bit.ly/7b6Wlx

Illinois Insurance Facts

Illinois Department of Insurance

Federal Stimulus – Premium Reduction for Group Continuation Coverage

Updated December 23, 2009

Note: This information was developed to provide consumers with general information and guidance about insurance coverages and laws. It is not intended to provide a formal, definitive description or interpretation of Department policy. For specific Department policy on any issue, regulated entities (insurance industry) and interested parties should contact the Department.

On February 17, 2009, President Barack Obama signed the American Recovery and Reinvestment Act (“ARRA”), commonly called the Stimulus Plan. ARRA provides a subsidy that may reduce by 65% the cost of COBRA and other state group continuation coverage for workers who lose their jobs.

On December 19, 2009, President Obama signed Public Law 111-118 (the “ARRA Subsidy Extension”), which amended ARRA to increase the maximum duration of the subsidy from 9 to 15 months, and to extend the eligibility period from December 31, 2009, to February 28, 2010.

What Are Group Continuation Laws?

Group continuation laws require employers to offer employees who lose group coverage the opportunity to continue their employer-based health insurance.

•COBRA is the federal law that applies to employer groups with 20 or more full-time employees on more than 50% of the business days in the prior calendar year, and to group plans offered by state and local governments.

•State continuation law (“mini-COBRA”) applies to fully insured group plans of any size, including employers with 19 or fewer employees.

If you are uncertain about which law(s) applies to your group plan, contact your employer or the U.S. Department of Labor at 1-866-444-3272.

NOTE: This fact sheet focuses on the premium reductions provided under ARRA. For more detailed information about your rights under federal and state continuation laws, including recent changes to the State mini-COBRA law made by Public Act 096-0013 (signed into law by the Governor on June 18, 2009), please refer to the Department of Insurance consumer fact sheets titled “Health Insurance Continuation Rights – COBRA” and “Health Insurance Continuation Rights – Illinois Law.”

When an Employee Loses Group Coverage and Elects Continuation, Who Pays the Premium?

Normally it is the employee who lost group coverage, not the employer, who must pay the entire health insurance premium.

Who is Eligible for Premium Reductions Under ARRA?

Individuals who lose group health coverage because of an involuntary termination (“former employees”) between September 1, 2008, and February 28, 2010, may be eligible for a 65% reduction of their COBRA or mini-COBRA premiums for up to 15 months.

The premium reduction is not available to workers whose modified adjusted gross income in the year they receive the premium reduction exceeds $145,000 for individuals and $290,000 for couples filing joint tax returns. The premium reduction will be phased out for individuals whose modified adjusted gross income is between $125,000 and $145,000 and for couples between $250,000 and $290,000. If an individual takes advantage of the premium reduction and in the same year exceeds the income limit, he or she must repay the amount of the premium reduction. We encourage individuals and couples to confirm eligibility with a tax specialist.

Who Will Benefit from the ARRA Subsidy Extension?

P.L. 111-118, enacted on December 19, 2009, extended the maximum duration of the premium reduction from 9 to 15 months. Even those individuals who, prior to the enactment of P.L. 111-118, lost eligibility for the premium reduction due to the end of the 9-month period may be eligible for the additional 6 months of subsidized premiums.

•Eligible individuals who chose to continue coverage after the 9-month premium reduction period must receive a refund or credit for premiums paid in excess of the reduced premium rate.

•Eligible individuals who did not pay the premium for a period of coverage beginning after the 9-month premium reduction period must be allowed to continue their coverage by making a retroactive payment. Such payment must be made by February 17, 2010, or within 30 days of receiving the notice described below, whichever is later.

How Do Individuals Sign Up for the Premium Reduction?

Eligible individuals will receive a notice with general information about the premium reduction under ARRA and a form to request the premium reduction.

For group plans subject to federal COBRA requirements, written notice must be provided by the former employer.

•Former employees who lose group health coverage will receive notification and enrollment forms allowing them to continue their group coverage and to request the premium reduction.

For group plans subject only to state mini-COBRA requirements (i.e., employers with 19 or fewer employees), written notice must be provided by the insurer providing coverage under the group plan.

•Former employees who lose group health coverage will receive written notice allowing them to request the premium reduction. This notice must be provided within 10 days of the involuntary termination.

The ARRA Subsidy Extension (P.L. 111-118) requires insurers and employers to provide additional information to former employees about the changes made by the new law, including the extension of the premium reduction period and the option for eligible individuals to make retroactive premium payments. Guidance for insurers and employers on these new notification requirements can be found on the Department’s website at http://insurance.illinois.gov/ModelNotices/COBRA.

If you have questions about the notices described above, you can contact your former employer or the insurer providing coverage under your group health plan. For plans subject to federal COBRA requirements, you may also contact the federal Department of Labor at 1-866-444-3272 or visit the agency’s website (http://www.dol.gov/ebsa/COBRA.html). For plans subject only to state mini-COBRA requirements, you may contact the Illinois Department of Insurance (“Department”) at 1-877-527-9431 or visit our website at http://insurance.illinois.gov/ModelNotices/COBRA.

MODEL NOTICES:

•The Department of Labor (DOL) has published Model Notices for employers to use when providing the notifications required by ARRA. Employers can download copies of these Model Notices from the DOL website at http://www.dol.gov/ebsa/COBRAmodelnotice.html.

•The Department of Insurance has created a state-specific Model Notice for use by insurers providing coverage subject only to state mini-COBRA requirements. These model notices are available on the Department’s website at http://insurance.illinois.gov/ModelNotices/COBRA/.

How will the Premium Reduction be Applied to Group Continuation Coverage?

Former employees who qualify for the premium reduction will only be required to pay 35% of the group coverage continuation premium. The remaining 65% will initially be paid by:

• the former employer, if the employer had 20 or more employees on more than 50% of the business days in the prior calendar year and is subject to federal COBRA provisions; or

• the insurer providing coverage under the group health plan, for those employers with fewer than 20 employees subject solely to mini-COBRA requirements.

The former employer or the insurer will then be reimbursed by the federal government through a reduction in payroll taxes.

What if an Employer or Insurer Refuses to Provide the Premium Reduction?

ARRA provides for expedited reviews if an employer or insurer denies an individual’s application for the premium reduction. Once the denied individual submits an appeal for review, the Department of Labor or the Center for Medicare and Medicaid Services (CMS) will make an eligibility determination within 15 business days.

DOL will handle appeals related to private sector employers subject to federal COBRA provisions (i.e., employers with 20 or more employees). For more information or to submit an appeal, please visit the DOL’s website at http://www.dol.gov/ebsa/COBRA/main.html or call a DOL benefits advisor toll-free at (866) 444-3272.

CMS will handle appeals related to state mini-COBRA plans, as well as appeals for Federal, State, or local governmental employees. For more information or to submit an appeal, please contact the CMS-sponsored help desk toll-free at (866) 400-6689 or via e-mail at continuationcoverage@maximus.com.

Will Individuals be Eligible for the Premium Reduction for as Long as They Are Eligible for Group Continuation Coverage?

The premium reduction will not necessarily last as long as your group continuation coverage. For example, former employees typically qualify for up to 18 months of federal COBRA coverage. The premium reduction lasts only up to 15 months. Therefore, an eligible individual who chooses to pay for 18 months of COBRA coverage would still have to pay 3 months of unsubsidized premiums.

Can an Individual Lose Eligibility for the Premium Reduction?

You can lose eligibility for the premium reduction in two ways. First, the premium reduction lasts only as long as you are eligible for group continuation coverage, but in no event longer than 15 months. Second, you become ineligible for the premium reduction when you become eligible for new group health coverage or Medicare.

•Beneficiaries must notify their former employer when they become eligible for new group health coverage.

•Beneficiaries who willfully neglect to notify their former employer of their eligibility for a new group health plan must repay 110% of the amount of the premium reduction to the federal government. No such penalty shall be imposed if the beneficiary demonstrates “reasonable cause” for the failure.

NOTE: Eligibility rules for the premium reduction differ from rules governing eligibility for COBRA coverage generally. Eligibility for COBRA continuation coverage ends only when a beneficiary enrolls in new group coverage or Medicare. However, simply being eligible for new group health coverage disqualifies an individual from receiving the premium reduction.

Does the Premium Reduction Apply to Group Continuation Coverage other than COBRA?

The premium reduction under ARRA applies to both federal COBRA continuation coverage and to comparable state continuation coverage known as “mini-COBRA” (215 ILCS 5/367e). ARRA does not apply to the state’s spousal continuation law or dependent continuation law. For more information about these laws, please refer to the Department of Insurance consumer fact sheet titled “Health Insurance Continuation Rights – Illinois Law.”

Does ARRA Extend the Length of Available Group Continuation Coverage?

ARRA itself does not change the length of time that group continuation coverage must be provided to eligible individuals: COBRA typically provides for up to 18 months of coverage, while mini-COBRA had provided for up to 9 months of coverage.

The period of coverage required under the state mini-COBRA law, however, was recently increased from 9 months to 12 months by Public Act 96-0013. All group plans subject to the law that are issued, delivered, amended or renewed after June 18, 2009, must provide for up to 12 months of continuation coverage. If an individual is currently receiving mini-COBRA coverage and the employer’s policy is renewed after June 18, 2009, the individual would be entitled to the additional 3 months of coverage, regardless of the date the individual first elected mini-COBRA coverage.

Who is Eligible for a Second Opportunity to Continue Group Coverage and Receive the Premium Reduction?

ARRA required a “second election period” so that former employees who lost group coverage prior to ARRA’s enactment and who initially chose not to continue their coverage, or chose to continue coverage and later stopped paying premiums, were given a second chance to continue their group coverage and receive the premium reduction. Individuals whose former employer is subject to federal COBRA provisions (i.e., employers with 20 or more employees) and who lost group coverage due to an involuntary termination that took place between September 1, 2008 and February 16, 2009, should have received notice of this second election period from their former employer by April 18, 2009. Former employees then had 60 days after receiving this notice to elect continuation coverage and request the premium reduction.

After the enactment of ARRA, Illinois passed a law (Public Act 096-0013) providing a similar second election period for Illinois employees of small businesses (i.e., employers with 19 or fewer employees). Former employees who lost group coverage due to an involuntary termination that took place after September 1, 2008, and who did not have continuation coverage in effect as of June 18, 2009, were eligible for this second election period. These individuals should have received notice from the insurer providing group coverage by July 18, 2009, and would then have 60 days after receiving notice to elect continuation coverage and request the premium reduction.

If you believe you were eligible for the second election period and did not receive notice, you can contact your former employer or the insurer providing coverage under your group health plan. For plans subject to federal COBRA requirements, you may also contact the federal Department of Labor at 1-866-444-3272 or visit the agency’s website (http://www.dol.gov/ebsa/COBRA.html). For plans subject only to state mini-COBRA requirements, you may contact the Illinois Department of Insurance (“Department”) at 1-877-527-9431 or visit our website at http://insurance.illinois.gov.

Does the Premium Reduction Affect Eligibility for other Income-Based Government Programs?

The amount of the premium reduction will not be counted as income in determining eligibility for, or assistance provided under, any other federal or state program.

Does ARRA Affect Individuals Who Qualify for COBRA Due to Eligibility for Trade Adjustment Assistance or Eligibility for Benefits from the Pension Benefit Guaranty Corporation?

ARRA provides significant extensions of COBRA coverage periods for individuals who receive benefits directly from the Pension Benefit Guaranty Corporation or are eligible for Trade Adjustment Assistance. If you have additional questions about these extensions, contact the federal Department of Labor at 1-866-444-3272 or visit the agency’s website (http://www.dol.gov/ebsa/COBRA.html).

For More Information

Call the Department of Insurance Consumer Services Section at (866) 445-5364 or our Office of Consumer Health Insurance at (877) 527-9431 or visit our website at http://insurance.illinois.gov

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COBRA Stimulus payments and eligibility extended

Tuesday, December 22nd, 2009

This is from the Department of Labor’s website. The original can be found at http://bit.ly/6fcZNC.

News Statement

Release Date: December 21, 2009
Contact Name: Gloria Della or Joseph De Wolk
Phone Number: 202.725.8422/202.579.4681

Statement of Phyllis C. Borzi on COBRA subsidy extension

Washington, DC – Phyllis C. Borzi, Assistant Secretary of the Employee Benefits Security Administration (EBSA) today released the following statement regarding the Consolidated Omnibus Budget Reconciliation Act (COBRA) and the recent extension of the premium reduction under the COBRA subsidy:

“I am pleased Congress has acted and the President has signed the Fiscal Year 2010 Defense Appropriations Act. The act extends the eligibility period for the COBRA premium reduction for an additional two months (through Feb. 28, 2010) and the maximum period for receiving the subsidy for an additional six months (from nine to 15 months). Millions of unemployed Americans and their families will be better able to afford and keep their health benefit coverage because of this new law.

“Individuals who had reached the end of the reduced premium period before the legislation extended it to 15 months will have additional time to pay the reduced premiums related to the extension. To continue their coverage they must pay the 35% of premium costs by (60 days after date of enactment) or, if later, 30 days after notice of the extension is provided by their plan administrator.

“We encourage you to subscribe to our COBRA Web site, www.dol.gov/cobra, to get information on new notice requirements, updated guidance, fact sheets, and frequently asked questions as they become available.

“Individuals should contact their plan or health insurance provider for information regarding the extension under their health plan. If you need further assistance contact an EBSA Benefits Advisor toll-free at 1-866-444-3272.”

U.S. Department of Labor news releases are accessible on the Department’s Newsroom page. The information in this news release will be made available in alternate format (large print, Braille, audio tape or disc) from the COAST office upon request. Please specify which news release when placing your request at 202.693.7828 or TTY 202.693.7755. The Labor Department is committed to providing America’s employers and employees with easy access to understandable information on how to comply with its laws and regulations. For more information, please visit the Department’s Compliance Assistance page.

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UniCare is Pulling out of Illinois

Wednesday, October 28th, 2009

UniCare announced today that they will be pulling out of the Illinois markets. This comes as a shock to everyone, including the hundreds of employees that will lose their jobs. NOTE: Details as they become available, will be forthcoming.

INDIVIDUAL HEALTH INSURANCE

If you are on individual health insurance via UniCare, you will be transitioned to Blue Cross Blue Shield of Illinois. This will be guaranteed issue, meaning they will accept you. Details have not been worked out, but my best guess is that there will be no underwriting and they will place you on a similar plan.

If you choose not to accept this, then your plan will end, probably around 12/31/2009.

GROUP HEALTH INSURANCE

If you are on a small group health insurance plan with UniCare, it looks like you have a choice between staying on your plan until your renewal date or transitioning to Blue Cross Blue Shield of Illinois. When this option is presented, I will evaluate whether it makes sense to move the group at this time.

Billing and claims should not change during this time.

Wellpoint (one of the largest insurers in the United States) is not going out of business, they are just packing their bags and exiting the Illinois market.

If you have questions, please contact me. More details as they become available.

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Legislative Update on Health Care Reform from NAHU

Friday, July 31st, 2009

Robert Slayton Associates Insurance believes the comprehensive health reform legislation working its way through Congress would have a profound impact on our clients. Working through our professional trade association, the National Association of Health Underwriters, we bring you this update on the latest happenings and means to contact your legislators on this critical issue.

Legislative Action in the House of Representatives

It was quite a busy week for health care reform negotiations in Washington. After a week of intense talks between the House Democratic leadership and the conservative Blue Dog Democrats Coalition, a deal appears to have been struck between the two groups of Democrats, and the Energy & Commerce Committee is expected to report a bill out of Committee with unified Democratic support on July 31. The bill will include what is being billed as the “Unity Amendment,” which includes concessions from both sides of the Caucus.

The other two committees of jurisdiction, the Ways & Means Committee and the Education and Labor Committees finished their versions of H.R. 3200 two weeks ago, and the initial goal was to report the measure out of Energy & Commerce last week and pass the entire measure on the House floor this week. However, the dispute with the Blue Dogs delayed the Energy & Commerce Committee mark-up, and now the House floor vote is delayed until Congress reconvenes in September.

The fate of H.R. 3200 and the efforts of the Blue Dogs when the three committee bills are merged together still remain under debate. There is some concern that agreements made with the Blue Dogs in the Energy & Commerce Committee will not be honored when the bill reaches the House Rules Committee in September. Over 57 progressive Democrats have signed a letter stating that they will not support earlier concessions promised to the Blue Dogs if they are brought the House floor, and Speaker Pelosi has indicated her support for the Progressive Caucus. The deal struck today is intended to alleviate this concern, but in reality the political climate after the August recess will have much to do with how the bills are “married” together as well.

Senate Finance Committee Will Not Mark Up Bill Until September

Over in the Senate, the bipartisan negotiation between Republican Senators Enzi, Grassley and Snowe and Committee Democrats has slowed, and Finance Committee Chairman Max Baucus (D-MT) announced on July 30 that the committee will not be able to mark up their version of health care reform legislation before the Senate adjourns for its August recess on August 7. The Finance Committee legislation, which is still being drafted, may not even be available for public release before the Senate adjourns next week. This delay, particularly when coupled with the deal reached in the Energy & Commerce Committee, raises the question of how long the Democrats will continue to allow the bipartisan negotiations to continue.

Brining Health Care Messaging to the Public Will be the Focus of the August Congressional Recess

With the August congressional recess set to begin, it is clear that Republicans and Democrats alike view the recess as the high water mark for health care reform. Sliding personal poll numbers for President Obama are a factor, as is a decline in public support for Democratic health care efforts. A Pew Research Center poll released Thursday that found that 44 percent oppose “health care plans currently before Congress,” while just 38 percent favor the plans. In a NBC/Wall Street Journal Poll, 42 percent now say that the president’s plan is a bad idea, a 10-point increase since last month.

Republicans and some conservative Democrats are interpreting those declining numbers as lack of public support for overwhelming change. Instead, they believe that the public favors more deliberative and targeted reform, perhaps on an incremental basis. Their strategy for the August recess is mammoth public education on the realities of a government-run public plan option and other costly and intrusive elements of the Democratic bills, as well as the need to “get health reform right.”

But Democratic leaders are interpreting these polls as only a failure of messaging, and plan to ramp up their campaign efforts into as high as gear as possible during the August recess. Their focus seems to be on targeting insurance companies as the villains, beginning with a pronouncement from House Speaker Pelosi earlier in the week. “It’s almost immoral what they are doing,” she told reporters. “They are the villains. They have been part of the problem in a major way.”

They also want to use the time clear up what they view as public misconception about their work. This week House Majority Leader Steny H. Hoyer (D-MD), conceded that Democrats have much ground to make up in August and need to focus on how their ideas would benefit the public if the party is to succeed on health reform. “We’re responsible for putting together a plan, and so we’ve been focused on that,” he said. “Republicans have been somewhat free to conjure up whatever they want.”

Grassroots Call to Action: Make Sure Health Reform is Done Right

Health reform is needed, but it needs to be both affordable and responsible, and it also should be crafted in a bipartisan way. This measure is the most consequential to be considered by Congress in decades—it will impact all citizens and change the scope of one-sixth of our nation’s economy. It’s crucial that we don’t let our congressional leaders rush to judgment on this measure. Instead, we need to urge them to spend August discussing the bill with their constituents, and then make changes to their bills when they reconvene in September to reflect the will of American employers and health care consumers. Click here to send a message to your legislators to let them know that you would like them to take the time to craft bipartisan comprehensive health care reform that will work for all Americans. Also, consider joining this coalition of concerned Americans dedicated to “getting health care reform right!”

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New Law Impacts Small Illinois Employers who offer Health Insurance

Thursday, June 25th, 2009

House Bill 2325 was signed into law on June 18,2009. It does two things that will impact you as an employer.

CHANGES

1. State Continuation has been expanded for 3 additional months to 12 months of total coverage.This change will go into effect at your renewal date (from 7/1/2009 renewals on).

2. New notification laws. You have 10 days to give an terminated employee notice of their rights to continue coverage and they now have 30 days within which to respond (they are required to respond in writing). Lack of timely notification can result in a $500 fine.

If you use a service, they should already know about these changes. If this terminated employee is eligible for the subsidy, then the insurance company is required to handle the notifications. If you fall into this category, I recommend taking the following action (as I’ve seen insurance companies screw up this part):

DOCUMENTATION OF TIMELY NOTICE

Print out a sheet stating that the employee/family is eligible for either 9 or 12 months of coverage (depending upon whether your group plan renewal has happened after 6/18/2009) and that this person has 30 days to elect this coverage in writing. Use the “Model ARRA Notice” and modify it for state continuation and the notification guidelines. Find it here: http://www.dol.gov/ebsa/COBRA.html. You can also request a copy of what your current COBRA service uses and provide it yourself.

TWO COPIES – ONE FOR YOU, ONE FOR THEM

Furnish two copies of this notice. One that the terminated employee must sign and date at the time of termination. The second copy they bring home. This will help you avoid the new $500 penalty.

NOTE: I am not an attorney or an expert on these notifications. To be perfectly compliant, check with your COBRA/State Continuation provider or attorney for specific language.

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Illinois Dependent Coverage set to change to 26/30 years old on June 1, 2009

Tuesday, April 28th, 2009

WHAT IS IT?

The Illinois legislature signed into law a measure that allows dependents to stay on a parent’s Group policy until age 26 if unmarried and until age 30 if they served as an active or reserve of the U.S. Armed Forces, including the National Guard and have been discharged from the military (except if it was a dishonorable discharge). This means that when a dependent turns 26 years old or 30 years old respectively, they will go off the policy (but are still eligible for either COBRA or State Continuation).

NOTE: The dependent does NOT have to be a full time college student to qualify.

WHEN DOES IT TAKE EFFECT?

It goes into effect on a group health insurance’s renewal date that occurs on or after June 1, 2009. For example, if a group is set to renew on October 1, 2009, then that is the date when this dependent coverage takes effect.

WHO DOES IT IMPACT?

This law impacts all fully insured and many self insured groups. This does NOT apply to individual/family health insurance.

WHAT DOES THIS MEAN FOR THOSE INSURED?

Those who are on a group health insurance plan and have a dependent over the age of 18 or 19 (if not a college student) or 23 (if a full time college student) can continue that dependent’s coverage on their group health insurance plan. If the dependent is not currently on the plan, they will have an opportunity to enroll during the group’s usual open enrollment period (there is a special 90 day window for this to occur).

SHOULD YOU ENROLL YOUR DEPENDENT ON GROUP COVERAGE?

My personal opinion is that if the dependent is eligible for individual health insurance coverage, then that is the most cost effective option. It also takes care of the potential problem that if they become uninsurable (i.e. having cancer); they would be able to keep individual coverage as long as they wanted. On the person was on a group plan and became uninsurable in the individual market, they would eventually be ineligible, need to go on COBRA/State Continuation, then onto the state’s uninsurable plan (ICHIP) which would be a more expensive option. The other alternative is that they would need to get a job that included group health benefits.

REMINDER: Parents, you can pay for the individual health coverage of your dependent directly if you choose. Insurance companies allow this. The typical rate for individual coverage is less than half of the group rate.

Contact me if you have questions. Robert Slayton 630-779-1144.

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COBRA Stimulus doesn’t include Special Election Period for Employer Groups under 20 Employees

Monday, April 6th, 2009

NO SPECIAL ENROLLMENT PERIOD

Through further discussions with attorneys and legislative people, the American Recovery and Reinvestment Act does not call for a special election period for those companies who fall under State Continuation (Mini-Med) guidelines.

What this means is that if you didn’t elect State Continuation originally, you will not be allowed to elect it now.

WRINKLE IN THE ACT

Some states are trying to pass laws that would allow this special enrollment period and I’ve heard (but been unable to verify) that some health insurance companies are allowing this special enrollment period. I know the state of California is trying to pass an act as this is written.

More facts as I get them.

Robert Slayton

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