Holiday Regulation Dump! That Pesky $63 per head fee and Much More!
More Proposed Regulations from HHS
While the Department of Health and Human Services (HHS) has been busy on several fronts (including fixing the healthcare.gov websites), they haven’t taken their “foot off the gas pedal” and are sending out new regulations at a solid pace. This week they issued proposed regulations that address a variety of Patient Protection and Affordable Care Act (PPACA) benefit provisions for 2015. While there is a 30-day comment period on these proposed regulations (so they aren’t final), it is rare that they change much by the time the final versions are released. Here is an overview of some of the key provisions.
That Pesky $63 per head fee – Transitional Reinsurance Program or “Premium Stabilization” Fee
The Reinsurance Assessment is a fee applicable to insured and self-funded major medical plans for calendar years 2014 through 2016. It will primarily be used to help cover the cost of high-dollar claims occurring within the individual market. The 2014 fee is $63 per person, which the updated regulation proposes to collect in two installments: $52.50 in January 2015, and $10.50 late in the fourth quarter of 2015. (Reports due 11/15/2014, HHS’ bill comes 12/15/2014, bills due in installments; typically from your ASO-claims payer to HHS). For 2015, the proposed fee is $44 per person. See our prior guidance (and details) on this topic from Dec 13, 2012.
The updated regulation also proposes to exempt certain self-funded group health plans from paying the fee for 2015 and 2016. Specifically, self-funded group health plans that do not use a third-party administrator for claims processing would be exempt.
Stabilizing Market Premiums for Individuals (not applicable to/for group plans)
To promote stable individual market premiums, the regulations propose modifications to the amount that the reinsurance program will pay to an insurer for a given policyholder in the individual market based on that person’s cumulative claim total over an applicable calendar year. The changes invest more of the reinsurance fee funds into the program sooner than originally planned.
2015 Marketplace Enrollment Period
The 2015 Health Insurance Marketplace open enrollment period will be held from November 15, 2014 – January 15, 2015.
Adjustments for Current Individual Policies Extended into 2014
Earlier this month, the federal government announced that states may allow individuals whose policies were in effect on October 1, 2013 to continue those policies through the end of the policy year that begins on and after January 1, 2014 even if they do not meet all PPACA requirements. In states that choose to permit insurers to extend these policies, the risk pool in the state’s Marketplace could be impacted. The regulations propose a number of state-by-state adjustments to address this impact. Remember, the individual market makes up less than 5% of all the insured plans in effect and this is a decision left to each state’s insurance commissioner. In the end, people that keep these non-PPACA-creditable plans will end up owing the PPACA-individual-mandate tax/penalty (if that is the only coverage they have).
States Moving from Federal to State-Run Marketplaces
States that are participating in the federal Marketplace for 2014 but want to establish a state-run Marketplace in the future will now have more time to prepare for the transition. The January 1 conditional approval deadline will be moved to June 15.
2015 Cost-Sharing Limits
The 2015 maximum annual out-of-pocket limits for all non-grandfathered plans will increase to $6,750 for individual coverage and $13,500 for family coverage. The maximum deductibles will increase to $2,150 individual and $4,300 family for insured non-grandfathered small group plans. For standalone child dental plans, the annual out-of-pocket maximum will be limited to $300 for one covered child and $400 for two or more children.
Protecting Privacy Information
Changes may be made to the eligibility and enrollment information collected by the Marketplace, but individual information will still be protected.
Patient Safety Standards
Plans offered on the Marketplace must meet certain patient safety standards. The initial standards will require that hospitals meet the Medicare Hospital Condition of Participation requirements related to quality assessment, performance improvement and discharge planning.
To be offered on the federal Marketplace, a plan must be “meaningfully different” from all other plans offered by the same insurer in the same service area and metal level. Meaningful difference requires that a consumer would be able to identify two or more material differences between plans in factors such as cost-sharing, provider networks and covered benefits.
2015 Federal Marketplace User Fee
The user fee paid by insurers that offer plans on the federal Marketplace will be 3.5% of premiums. Adjustments will be made to reimburse third-party administrators that provide payment for contraceptive services for self-funded group plans.
IRS Issues Final Rule on PPACA’s Health Insurance Tax
The IRS, via Section 9010 of PPACA, is requiring health plans and commercial insurers to pay $8 billion in new taxes in the coming year, and more in later years, to help compensate for the new, subsidized business PPACA is supposed to send to carriers. The “covered entities” subject to PPACA Section 9010 will have to pay a flat, per-person tax using Form 8963. The IRS says it will apply the Section 9010 “belly button tax” to most of the types of entities that asked for relief from the tax in comment letters. The IRS says that, because of the wording in PPACA, the Section 9010 tax will apply to colleges that run their own health plans; companies that run plans for Medicaid and other government programs; any state-run high risk pools that continue to operate in 2014; dental plans; and vision plans.
The IRS says it will not make employee assistance plans pay the tax, at least for now, but may apply it to them later, if it looks as if some EAPs are providing significant health benefits. The IRS says it is still deciding what to do about stop-loss insurance arrangements.
More IRS Notices
- Notice 2013-76, which describes the procedures carriers and plans should follow when submitting their Form 8963 health insurance provider tax forms.
- Revenue Ruling 2013-27, which requires carriers to include any premium revenue they use to pay the new tax in their taxable income.
- Notice 2013-45, a set of answers to questions about the IRS decision to delay enforcing employer health benefits reporting and minimum coverage requirements for at least a year.
Small Business Health Options Program (SHOP) Plans
The proposed regulations include several new requirements related to premium payments and plan offerings that will take effect once employee choice becomes available in federal Marketplace SHOP plans. However, the federal SHOP will not take any online enrollments until October 2014 (they delayed online enrollment for another year).