Transcript PPACA (AKA: Obama Care) - Insurance Community University

Some things you should know:
PPACA (AKA:
Obama Care)
Fiduciary Liability
Exposures
• The class will begin at the top of the hour.
There is no sound at this time.
• This class is being recorded. The recording
can be found in the Community at Webinars
Archive
• You can ask questions at anytime, type them
into the chat box.
• Check your chat box for links to upcoming
classes.
• This class is not approved for CE credit.
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Insight Insurance Consulting
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Copyright 2013©
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Marjorie L. Segale, AFIS, CISC, RPLU, CIC, CRIS, ACSR, CISR
Insurance Community Center, LLC
Director of Education
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What is PPACA?
Fiduciary Liability and increase risk due to
PPACA
Coverage concerns
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Patient Protection and Affordable Care Act
 Signed into law 3/23/2010
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Promoted as a means to increase the quality
of health care and control cost of health
insurance
The federal agency with enforcement ability
is the IRS
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Regulations have been, are and will be
created to address the various provisions in
this voluminous law
 With unknown regulations comes risk to the
employer
 There are a number of mechanisms built into the
law, all of which also increase risk to your business
clients if they fail on any front to comply with
these
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FDA authorized to approve generic versions of drugs and
grant pharmaceutical manufacturers the right to 12 years
exclusivity of the drug until generics can be developed
Non-profit Patient-Centered Outcomes Research Institute
established to undertake comparative effectiveness research
The Prevention and Public Health Fund was created to fund
programs and research designed to increase chronic disease
prevention
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A National Prevention, Health Promotion and Public Health
Council was created to develop a national strategy on
prevention, health promotion and public health
 The Indian Health Care Improvement Act was reauthorized
and amended
 Chain restaurants and food vendors with 20 or more
locations are required to display caloric content of their food
and additional information, such as fats and sodium content
available on request
 States allowed to apply for a “State Plan Amendment” to
expand family planning eligibility
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Adults with existing conditions became
eligible to join a temporary high-risk pool to
be superseded by the health care exchanges
coming in 2014
 Pre-existing condition
 Uninsured for 6 months
 No age requirement
 Premiums are set as if for a standard person
without increased heath risks
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Insurers prohibited from imposing lifetime
dollar limits on essential benefits
Dependents permitted to remain on parent’s
insurance plan until age 26
 Including dependents no longer living in family
home, not listed on parent’s tax return, no longer
a student or married
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Insurers prohibited from excluding preexisting medical conditions
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All new insurance plans must include
preventive care and medical screenings
 Insurers prohibited from charging co-payments,
coinsurance or deductibles for these services
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Insurer’s abilities to enforce annual spending
caps restricted (will be prohibited completely
in 2014)
Insurers prohibited from dropping
policyholders when they become ill
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Insurers are required to reveal their operating
costs
Insurers are required to implement an
appeals process for coverage determination
and claims on all new plans
Medicare is expanded to small, rural hospitals
and facilities
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Medicare patients with chronic illnesses must
be monitored and evaluated every 3 months
for coverage of the medications required
A new website to provide consumers
insurance information for individuals and
small business in all states
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A temporary credit program is established to
encourage private investment in new
therapies for treatment and prevention
All new insurance plans must cover
immunizations and adult vaccinations as
recommended by the Advisory Committee on
immunization
 No co-pays, coinsurance or deductibles are
allowed if provided by an in-network provider
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Insurers must spend 80% of premium dollars
for individuals and small group policyholders
and 85% for large groups on health costs and
claims
The Centers for Medicare and Medicaid
Services responsible for developing the
Center for Medicare and Medicaid Innovation
and overseeing the testing of innovative
payment and delivery models
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All health insurance companies must inform
the public when they want to increase health
insurance rates for individual or small group
policies by an average of 10% or more
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1-2012
 Employers issuing more than 250 W-2 forms in
each preceding year must disclose the value of the
benefits they provided
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8-2012
 All new plans must cover certain preventive
services without cost sharing (deductibles, etc.)
▪ Mammograms
▪ Colonoscopies
 Women’s Preventive Services without cost sharing
▪ Well woman visits
▪ Diabetes screening (while pregnant)
▪ Includes FDA approved contraception methods
(Contraception Mandate)
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The Centers for Medicare & Medicaid Services
to being the Readmissions Reduction
Program that requires CMS to reduce
payments to hospitals with excess
readmissions
 Penalties will apply and increase from 1% of
Medicare reimbursements to 2% in 2013 and 4%
in 2014
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Income from self-employment and wages of
single individuals in excess of $200K annually
subject to additional tax of .9%
 $250,000 married filing jointly
 $125,000 for married person filing separately
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Limit on pre-tax contributions to healthcare
flexible spending accounts capped at $2,500
per year
Medical devices subject to a 2.3% excise tax
at time of purchase
 This also applies to some items purchased by
veterinarians such as gloves and catheters
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Insurance companies required to use
standardized paperwork
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Religious organizations that were exempted
from the Contraception Mandate for a year
must now comply
 As of their plan renewal post 8-1-2013
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Individuals may enroll in health insurance
plans through state-based health insurance
exchanges for coverage effective 1-1-2014
 Open enrollment for this calendar year ends on 3-
31-2014
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Open enrollment in ensuing years begins on
10-1 and ends on 12-7 annually
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Insurers prohibited against charge higher
rates for pre-existing conditions or gender
Insurers prohibited from establishing annual
spending caps on essential health benefits
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Individual and employer mandates have been
postponed to 2015
In participating states, Medicaid eligibility
expanded
Health insurance exchanges established and
subsidies for insurance premiums given to
those individuals who buy a plan (income
restrictions apply)
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Two federally regulated Multi-State Plans
(MSP) become available through some state
plans
 One must be offered by a non-profit insurer
 The other cannot cover abortion services
 Availability 60% of all states in 2014 / 70% in 2015 /
80% in 2016 / 100% in 2017
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Patient eligibility waiting periods in excess of
90 days for group coverage prohibited
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Two years of tax credits offered to qualified
small businesses 50% premium subsidy
 Average payroll no more than $50,000 per
employee up to 25 Full Time Equivalent (FTE)
employees
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$2,000 maximum annual deductible for single
individual plan and $4,000 maximum annual
deductible for any other plan
 Applies to employer-sponsored plans
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Spending and coverage cuts to Medicare
Advantage and includes reduction of
Medicare and Medicaid drug reimbursement
rates
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New excise tax on pharmaceutical companies
and is based upon the market share of the
company
Health insurance companies become subject
to new excise tax based upon market share
for 2014-2018
 Thereafter increased annually at the rate of
inflation
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Qualifying medical deductions threshold
increases from 7.5% to 10% of AGI
Consumer Operated and Oriented Plans
(member-governed non-profit insurers)
entitled to a 5-year federal loan can start
offering coverage
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Employer mandate goes into effect
Individual mandate goes into effect
Medicare fee schedule now used to provide
larger payments to physicians who provide
high-quality care compared to cost
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States allowed to shift children eligible for
care to health insurance exchanges
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States permitted to form health care choice
compacts and allow insurers to sell policies in
any state participating in the compact
Threshold for itemizing medical expenses for
seniors increases from 7.5% to 10% of income
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All existing health plans must cover approved
preventive care and checkups
 No cost sharing allowed
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40% excise tax on high cost (Cadillac) plans
imposed
 Insurance premiums in excess of $27,500 for
family plans and $10,200 (individual plans)
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A state may apply to the SHHS for a “waiver of state
innovation” provided the state passes legislation
implementing an alternative health care plan that
meets certain criterion
 This would allow the state to be exempt from some of the
requirements imposed under PPACA
 Can receive payment from the federal government equal
to the aggregate amount of any federal subsidies and tax
credits their residents would have been eligible to receive
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Medicaid extends coverage to former foster
care youths in care at least 6 months and
under 25 years old
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Guaranteed issue
 Policies must be issued regardless of any medical
condition
 Partial community rating requires insurers to offer
the same premium to same age group and
geographic location without regard to gender
 No exclusions for pre-existing medical conditions
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Applies to employer with more than 50
employees if there is no health insurance to
full-time employees
 FTEs are those employed 30 hours weekly (this is
calculated on a week basis, not a 5-day work
week)
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$2,000 per employee penalty for failure to
provide health care
Postponed to 1-2015
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All individuals not covered by an employer
sponsored health plan or government
sponsored plans, such as Medicare must
secure an “approved” private insurance policy
or pay a penalty
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This was put into place in an attempt to
reduce the number of people that might not
have coverage, but would wait to contribute
to the collective premium pool until they
become ill or injured
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An exception to this requirement is if the
individual is a member of a recognized
religious sect exempted by the IRS
This requirement can also be waived in cases
of financial hardship
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The initial penalty is $95.00 or up to 1% of
income over the filing minimum, whichever is
greater
In future years, this penalty will increase to a
minimum of $695 for individuals and $2,085
for families or 2.5% of income over the filing
minimum
This was to take effect on 1-1-2014 but has
been delayed to 1-1-2015
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State-based
Regulated and administered by either federal
or state government
Private insurers may sell plans to individuals
and small businesses
May use subsidies if qualified to pay for the
cost of the coverage
 Websites will be used to market these plans and
will be regulated and comparable plans
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Reducing work hours
Changing employees to another sister
company (this is already in the regulations –
the business is viewed as a whole, not is
separate “pieces”
Fire employees to get under the threshold
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Change the health plan to minimum essential
coverage
Downgrade “Cadillac” plans
Move employees to a PEO
Penalties and fines imposed by federal and
state governmental agencies
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Discrimination claims may increase
 EPLI
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Wrongful termination claims may increase
 EPLI
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Changes in health plans causing employees
financial harm
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Fiduciary Liability
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Moving employees to PEO
 Combination
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Penalties and fines
 Watch out for changes in all Executive Risk
policies that may remove existing coverage
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If you have only been offering Fiduciary
Liability if the insured has a 401k – better
change your sales approach
ERISA and now PPACA impose
responsibilities upon the employer that can
have severe financial consequences to the
employer
 Employees or the government can be the plaintiff
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PPACA has lent new clarity to ERISA
The term "group health plan" has the same meaning
given that term by Section 2791(a) of the Public
Health Service Act, which provides that:
 “The term "group health plan" means an employee welfare benefit
plan (as defined in section 3(1) of the Employee Retirement Income
Security Act of 1974 [29 U.S.C. §1002(1)]) to the extent that the plan
provides medical care (as defined in paragraph (2)) and including
items and services paid for as medical care) to employees or their
dependents (as defined under the terms of the plan) directly or
through insurance, reimbursement, or otherwise."
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PPACA recognizes that there are ERIDSA
welfare benefit plans that provide health
benefits and they are now officially classified
as “group health plans”
This also brings in self-funded health
insurance plans as well
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Responds for
financial loss
caused by actions
or inactions of
persons
responsible for
providing,
managing and
administration of
employee benefit
programs
• Covers business assets of the
insured company and
personal assets of officers,
directors, partners, members,
supervisors, managers and
any other category of an
insured person
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A written demand for monetary damages
or non-monetary relief
A civil proceeding commenced by the
service of a complaint or similar pleading
A criminal proceeding commenced by a
return of an indictment or information
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A formal civil administrative or civil regulatory
proceeding commenced by the filing of a notice of
charges or similar document or by the entry of a
formal investigative order or similar document
A written notice of commencement of a fact-finding
investigation by the U.S. Department of Labor, the
U.S. Pension Benefit Guaranty Corporation, or any
similar governmental authority.
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Any breach of the responsibilities, obligations
or duties imposed by ERISA upon fiduciaries
of the Sponsored Plan in their capacity as
such fiduciaries;
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Responds for legal liability imposed upon an
employer for their responsibility in providing
a defined plan for their employees
• Includes imposition of liability under ERISA
• Can include the EBLI coverage section for
liability arising out of negligence in
administration of these plans
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Community Lecture
 October 22nd Cyber Liability and Personal Lines
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University CE
 September 12th Farm Liability
 September 17th Website Review
 September 19th Integrated Disability Management
 Insight on Ethics and the Insurance Industry
▪ Our last Ethics class of 2013
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