Regulations Regarding Short-Term Limited-Duration Insurance, Excepted Benefits, and Lifetime/Annual Limits

Recently, the Department of the Treasury, Department of Labor (DOL), and Department of Health and Human Services (HHS) (collectively the Departments) issued final regulations regarding the definition of short-term, limited-duration insurance, standards for travel insurance and supplemental health insurance coverage to be considered excepted benefits, and an amendment relating to the prohibition on lifetime and annual dollar limits.

Effective Date and Applicability Date

These final regulations are effective on December 30, 2016. These final regulations apply beginning on the first day of the first plan or policy year beginning on or after January 1, 2017.

Short-Term, Limited-Duration Insurance

Short-term, limited-duration insurance is a type of health insurance coverage designed to fill temporary gaps in coverage when an individual is transitioning from one plan or coverage to another plan or coverage. Although short-term, limited-duration insurance is not an excepted benefit, it is exempt from Public Health Service Act (PHS Act) requirements because it is not individual health insurance coverage. The PHS Act provides that the term ‘‘individual health insurance coverage’’ means health insurance coverage offered to individuals in the individual market, but does not include short-term, limited-duration insurance.

On June 10, 2016, the Departments proposed regulations to address the issue of short-term, limited-duration insurance being sold as a type of primary coverage.

The Departments have finalized the proposed regulations without change. The final regulations define short-term, limited-duration insurance so that the coverage must be less than three months in duration, including any period for which the policy may be renewed. The permitted coverage period takes into account extensions made by the policyholder ‘‘with or without the issuer’s consent.’’ A notice must be prominently displayed in the contract and in any application materials provided in connection with enrollment in such coverage with the following language:

THIS IS NOT QUALIFYING HEALTH COVERAGE (‘‘MINIMUM ESSENTIAL COVERAGE’’) THAT SATISFIES THE HEALTH COVERAGE REQUIREMENT OF THE AFFORDABLE CARE ACT. IF YOU DON’T HAVE MINIMUM ESSENTIAL COVERAGE, YOU MAY OWE AN ADDITIONAL PAYMENT WITH YOUR TAXES.

The revised definition of short-term, limited-duration insurance applies for policy years beginning on or after January 1, 2017.

Because state regulators may have approved short-term, limited-duration insurance products for sale in 2017 that met the definition in effect prior to January 1, 2017, HHS will not take enforcement action against an issuer with respect to the issuer’s sale of a short-term, limited-duration insurance product before April 1, 2017, on the ground that the coverage period is three months or more, provided that the coverage ends on or before December 31, 2017, and otherwise complies with the definition of short-term, limited-duration insurance in effect under the regulations. States may also elect not to take enforcement actions against issuers with respect to such coverage sold before April 1, 2017.

For information on final regulations regarding excepted benefits, specifically similar supplemental coverage and travel insurance—as well as information on the definition of essential health benefits for purposes of the prohibition on lifetime and annual limits, view UBA’s ACA Advisor, “Regulations Regarding Short-Term Limited-Duration Insurance, Excepted Benefits, and Lifetime/Annual Limits.”

 

Blog provided by United Benefit Advisors Insight and Analysis Blog, Danielle Capilla, Chief Compliance Officer at United Benefit Advisors. http://blog.ubabenefits.com/regulations-regarding-short-term-limited-duration-insurance-excepted-benefits-and-lifetime/annual-limits

Get the Facts

Recently, the Department of the Treasury, Department of Labor (DOL), and Department of Health and Human Services (HHS) (collectively, the Departments) issued FAQs About Affordable Care Act Implementation Part 34 and Mental Health and Substance Use Disorder Parity Implementation.

 The Departments' FAQs cover two primary topics: tobacco cessation coverage and mental health / substance use disorder parity.

 Tobacco Cessation Coverage

 The Departments seek public comment by January 3, 2017, on tobacco cessation coverage. The Departments intend to clarify the items and services that must be provided without cost sharing to comply with the United States Preventive Services Task Force's updated tobacco cessation interventions recommendation applicable to plan years or policy years beginning on or after September 22, 2016.

 Mental Health / Substance Use Disorder Parity

 Generally, the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) requires that the financial requirements and treatment limitations imposed on mental health and substance use disorder (MH/SUD) benefits cannot be more restrictive than the predominant financial requirements and treatment limitations that apply to substantially all medical and surgical benefits.

 A financial requirement (such as a copayment or coinsurance) or quantitative treatment limitation (such as a day or visit limit) is considered to apply to substantially all medical/surgical benefits in a classification if it applies to at least two-thirds of all medical/surgical benefits in the classification.

 If it does not apply to at least two-thirds of medical/surgical benefits, it cannot be applied to MH/SUD benefits in that classification.

 If it does apply to at least two-thirds of medical/surgical benefits, the level (such as 80 percent or 70 percent coinsurance) of the quantitative limit that may be applied to MH/SUD benefits in a classification may not be more restrictive than the predominant level that applies to medical/surgical benefits (defined as the level that applies to more than one-half of medical/surgical benefits subject to the limitation in the classification).

 In performing these calculations, the determination of the portion of medical/surgical benefits subject to the quantitative limit is based on the dollar amount of all plan payments for medical/surgical benefits in the classification expected to be paid under the plan for the plan year. The MHPAEA regulations provide that "any reasonable method" may be used to determine the dollar amount of all plan payments for the substantially all and predominant analyses.

 MHPAEA's provisions and its regulations expressly provide that a plan or issuer must disclose the criteria for medical necessity determinations with respect to MH/SUD benefits to any current or potential participant, beneficiary, or contracting provider upon request and the reason for any denial of reimbursement or payment for services with respect to MH/SUD benefits to the participant or beneficiary.

 However, the Departments recognize that additional information regarding medical/surgical benefits is necessary to perform the required MHPAEA analyses. According to the FAQs, the Department have continued to receive questions regarding disclosures related to the processes, strategies, evidentiary standards, and other factors used to apply a nonquantitative treatment limitation (NQTL) with respect to medical/surgical benefits and MH/SUD benefits under a plan. Also, the Departments have received requests to explore ways to encourage uniformity among state reviews of issuers' compliance with the NQTL standards, including the use of model forms to report NQTL information.

 To address these issues, the Departments seek public comment by January 3, 2017, on potential model forms that could be used by participants and their representatives to request information on various NQTLs. The Departments also seek public comment on the disclosure process for MH/SUD benefits and on steps that could improve state market conduct examinations or federal oversight of compliance by plans and issuers, or both.

 For information on the Department’s answers to the remaining FAQs related to MH/SUD parity, view UBA’s ACA Advisor, FAQs on Tobacco Cessation Coverage and Mental Health / Substance Use Disorder Parity.

Blog provided by: Danielle Capilla, Cheif Compliance Officer at United Benefit Advisors. http://blog.ubabenefits.com/faqs-on-tobacco-cessation-coverage-and-mental-health-/-substance-use-disorder-parity

The Impact of Wearable Devices in the Healthcare Industry

Wearable fitness devices have been a hot topic in health and wellness for a few years now, but what kind of impact have wearables really had on improving health outcomes? Wearable fitness devices can be used to track physical activity, sleep, heart rate, and even provide on-screen workouts. They are most often paired with a smartphone or website to track and store data. There has been a lot of hype about the potential to promote positive health outcomes through using wearables, but a recent study suggests they may not be impacting health as expected.

The Journal of the American Medical Association (JAMA) published a study in September that evaluated the theory that incorporating wearable technology into a weight loss program would yield greater weight loss results. The study was comprised of 471 participants, all following a low-calorie diet and engaging in regular physical activity and group counseling sessions. They also received telephone counseling sessions, text messages, and access to online study materials. After six months, participants were split into two groups. The control group continued a self-monitoring diet and physical activity program using a website to track physical activity. The other group received wearable devices with an accompanying website to track diet and physical activity. The results showed those using the wearable devices did not yield any more weight loss than those in the standard weight loss program; the wearable device group actually lost less weight over 24 months.

Although this study resulted in wearable devices not proving to drive outcomes for weight loss, it should not be concluded that wearable devices are not useful. Wearable devices have proven useful in helping the patient and clinician create a plan of care and track outcomes. Wearable devices are also helpful in providing real-time data and promoting self-management for chronic conditions. Self-monitoring blood glucose meters and blood pressure monitors have been around for a while, but with the ability for the data to automatically upload to a smartphone app or website, it can help drive health outcomes. These programs can provide instant feedback, track patterns, show progress, and can be easily shared with a health care provider. Wearables are likely more helpful when paired with other resources or tools such as a health coach, personal trainer, health care provider, wellness programs, social competitions, etc.

Clinical Use

In addition to integration into wellness programs, wearable devices are making their way into clinical settings and are being used to provide more objective data. Geisinger Orthopaedic Institute has started a research program using wearable activity devices to collect real-time data from patients. This data will be used to monitor patient activities along with subjective data collection. The data collected will be used to research what practices are best for recovery and to improve decision-making and health outcomes.

Future

What’s next for wearable devices in health care?

Several technology companies are revealing new wearables that could be used in patient care. Earlier in 2016, Philips introduced a wearable biosensor that would continuously measure vitals such as heart rate, respiratory rate, skin temperature, posture, physical activity, and a single-lead ECG. This biosensor would be connected to software that would send notifications to the clinician or caregiver, which could help with early detection and intervention to improve patient outcomes.

The Biodesign Institute of Arizona State University is conducting a research project called Project HoneyBee. Project HoneyBee is researching how and which wearable biosensors can be used to drive better patient outcomes while reducing health care costs. This project is aiming to validate biosensors as an inexpensive technology that can be useful in a clinical setting and for reducing the costs of chronic disease. Some disease areas already being studied include heart disease, chronic obstructive pulmonary disease (COPD), atrial fibrillation, and diabetes.

Although it is evident more research is needed to determine the best way to incorporate wearables into health care to drive better outcomes, many still believe there is a lot of potential and companies are continuing to research and develop new products.

 

Blog provided by United Benefit Advisors Insight and Analysis Blog, Kaycee Eaton, Assistant Population Health Strategist for Vital Incite, LHD Benefit Advisors, a UBA Partner Firm. http://blog.ubabenefits.com/the-impact-of-wearable-devices-in-the-healthcare-industry

 

 

Employers and Employees Teeter on Healthcare Cost and Coverage Tightrope

Over the past few years, we have seen the cost of health care steadily increase – a trend supported by the latest data from the 2016 UBA Health Plan Survey. During the recession, employers implemented health plans with higher copays, higher deductibles, or offered multiple plans with a variety of deductibles and pushed the cost of the lower deductible plans onto employees in an attempt to keep their costs for offering coverage at the same rate or less.

We also saw the introduction of high deductible consumer-driven health plans (CDHPs), some that also offered the option of depositing money on a tax-free basis into a health savings account (HSA) that could be used to pay for qualified medical expenses.

The HSA plans were very attractive, as many offered 0% coinsurance once the $2,000 or $3,000 deductible had been met and were priced well below other more traditional health plans. The expectation being if the consumer was paying all of their medical costs for the first few thousand dollars, they would be less likely to actively consume health care unless necessary.

It was also a way for employers to reduce premium costs by offering a high deductible plan, and fund an HSA account that an employee could use to pay for qualified medical expenses and essentially self-fund most of the up-front costs to the employee for the medical plan. In many cases, employers were able to offer a richer medical plan by combining the medical plan with HSA contributions, and still save money over their current traditional health plan costs.

What the insurance carrier actuaries did not realize was the impact this funding of the health plan consumer costs was going to have on the utilization of the health plans by the plan members. These low premium health plans were essentially "blown up" with heavy utilization, and the premiums went up so that the carriers could cover the cost of the claims and services being provided.

The insurance carriers are trying to do everything they can to keep premium costs from rising while still keeping the plan benefits within the confines of what the Patient Protection and Affordable Care Act (ACA) says must be covered. It is a balancing act, and one that is not moving in favor of the employees and their dependents.  

Plan copays for office visits are holding steady, but deductibles and out-of-pocket maximums are on the rise as are prescription drug copays, which are shifting more and more of the costs to employees and their families. Some carriers are dramatically changing their prescription drug formulary lists, deleting many of the drugs they covered previously, adopting more tiers of prescription drugs, implementing co-insurance instead of copays for higher-cost specialty drugs, and raising copays in all tiers.

Furthermore, the 2016 UBA Health Plan Survey has also shown a reduction in employer funding toward HSAs for employees this past year, and employers are asking employees to take on more and more of the insurance premiums, which again translates into higher costs for employees.

Blog provided by United Benefit Advisors Insight and Analysis Blog, Elizabeth Kay, Compliance and Retention Analyst at United Benefit Advisors. http://blog.ubabenefits.com/employers-and-employees-teeter-on-healthcare-cost-and-coverage-tightrope 

2016 Election Results: The Potential Impact on Health and Welfare Benefits

2016 Election Results: The Potential Impact on Health and Welfare Benefits

Following the November 2016 election, Donald Trump (R) will be sworn in as the next President of the United States on January 20, 2017. The Republicans will also have the majority in the Senate (51 Republican, 47 Democrat) and in the House of Representatives (238 Republicans, 191 Democrat). As a result, the political atmosphere is favorable for the Trump Administration to begin implementing its healthcare policy objectives. Representative Paul Ryan (R-Wis.) will likely remain the Speaker of the House. Known as an individual who is experienced in policy, it is expected that the Republican House will work to pass legislation that follows the health care policies in Speaker Ryan's "A Better Way" proposals. The success of any of these proposals remains to be seen.

Going Where Others Fear to Tread: When COBRA and the FMLA Cross Paths

The FMLA affects COBRA continuation coverage requirements. The FMLA entitles eligible employees of covered employers to take unpaid, job-protected leave for specified family and medical reasons for up to 12 weeks. The FMLA also protects employees, spouses, and dependents who are covered under a group health plan (GHP); those covered are entitled to the continuation of coverage while on leave on the same terms as if the employee was continuing to work.

Confusion may arise when FMLA and COBRA cross paths. A few problematic areas include determining when a qualifying event occurs, when calculating the maximum coverage period, and the consequences of an employee’s failure to pay their share of premiums during FMLA leave.

Qualifying Event

Typically, FMLA and COBRA intersect if an eligible employee does not return to work after exhausting his or her FMLA leave. While FMLA is not a COBRA qualifying event, a qualifying event could occur if the employee does not return to work or notifies the employer of his or her intent to not return to work at the end of the FMLA period. A qualifying event occurs if: (1) an employee or the spouse or a dependent child of the employee is covered under a GHP of the employee’s employer on the day before the first day of FMLA leave (or becomes covered during the FMLA leave); (2) the employee does not return to work at the end of the FMLA leave; and (3) the employee or the spouse or a dependent child of the employee would, in the absence of COBRA continuation coverage, lose coverage under the GHP before the end of the maximum coverage period. When it comes to the qualifying event of reduction in hours, the IRS specifically excludes FMLA leave from that category.

If the employer eliminates coverage under the GHP for the employee’s class of employees during the employee’s FMLA leave, then there is not a qualifying event. Any lapse of coverage under a GHP during FMLA leave is irrelevant in determining whether a set of circumstances constitutes a qualifying event or when a qualifying event occurs. Assuming the employer does not eliminate the GHP, the qualifying event occurs after the FMLA leave is exhausted and the employee does not return to work (or notifies the employer of the intent to not return to work).

Maximum Coverage Period

A qualifying event occurs on the last day of FMLA leave. The maximum coverage period is measured from the date of the qualifying event. If, however, coverage under the GHP is lost at a later date and the plan provides for the extension of the required periods, then the maximum coverage period is measured from the date when coverage is lost. For example, if the last day of FMLA leave is on the 21st of the month but the plan does not terminate coverage until the last day of the month, the last day of the month is the day of the qualifying event. The maximum coverage period is calculated from the last day of the month.

If state or local law requires coverage under a group health plan to be maintained during a leave of absence for a period longer than that required under FMLA (for example, 16 weeks of leave rather than for the 12 weeks required under FMLA), the longer period of time is disregarded for purposes of determining when a qualifying event occurs.

(Not) Paying Premiums

While on FMLA leave, the employee must continue to make any normal contributions to the cost of the premiums. Employers have a few options for handling payment of premiums during unpaid leave; the adopted policy should be documented in the employee handbook and discussed prior to the employee taking FMLA leave, if possible.

An employer’s trap arises if an employee does not pay his or her portion of the premium while out on unpaid FMLA leave. The employer may be tempted to discontinue coverage upon failure of the employee to pay their share. However, this is problematic if the employer cannot guarantee that the employee will be provided the same benefits on the same terms upon returning to work.

The employee’s failure to pay their share of the premiums while on FMLA leave does not create a COBRA qualifying event. Additionally, employers may not condition COBRA continuation coverage on whether the employee reimburses the employer for the premiums the employer paid while the employee was on FMLA leave. Moreover, it is not acceptable for an employer to increase the COBRA premium rate above 102 percent in order to recoup “past premiums due” when the employee was out on FMLA leave.

What happens if an employee experiences a COBRA qualifying event and elects COBRA, after which the employee takes FMLA leave, during which the employee fails to pay the COBRA premiums? Recall that the FMLA requires an employer to reinstate the employee to the same group health benefits after returning from FMLA leave. COBRA, however, is not a group health plan under FMLA. Consequently, an employee’s failure to pay COBRA premiums while on FMLA leave does allow the plan to terminate the employee’s coverage. (Remember, there may be grace periods for late payment or more generous state laws impacting the decision and time to terminate coverage. Be sure those timelines are followed and documented.)

While there is potential for the weary employer to misstep, the intersection of FMLA and COBRA can be handled, so long as it is with care and caution.

Blog provided by United Benefit Advisors Insight and Analysis Blog, Jennifer Stanley, In-house Counsel & Compliance Office for iaCONSULTING, a UBA Partner Firm. http://blog.ubabenefits.com/going-where-others-fear-to-tread-when-cobra-and-the-fmla-cross-paths

Are Opt-Outs on the Way Out?

Opt-out payments or cash in lieu of benefits have been a staple in the employee benefits industry for many years. Employers offer individuals who are eligible to enroll in their group health plan a sum of money, typically paid monthly, to those who waive enrollment in the group health plan. Employers who offer group health plans often use opt-out payments to share the savings they receive when an employee chooses not to enroll in the benefits offered.

These opt-out arrangements can take two different structures:

Conditional opt-outs require the employee to satisfy a condition in order to receive the opt-out payment. Typically the condition is proof of other group minimum essential coverage (MEC).

Unconditional opt-outs are offered to all employees and simply require the employee to waive coverage under the group health plan.

For many years, so long as employers were offering opt-outs uniformly to all benefit-eligible employees, the government had little, if any, regulation over opt-outs. However, beginning in 2015, multiple government agencies began tightening the parameters around permissible opt-outs and, in some situations, appear to restrict them completely. Employers are experiencing increased scrutiny over opt-outs from various agencies because of recent regulatory guidance.

As multiple government agencies are tightening the parameters around permissible opt-outs, many employers have been dropping opt-outs before they become a compliance problem. In fact, according to the UBA Health Plan Survey, only 2.8% of employers offered a bonus to employees to waive medical coverage in 2016, a 20% decrease from three years ago. But for those that do, the bonus amount is on the rise. The average annual single bonus in 2016 is $1,884, a 12% increase from last year.

Blog provided by United Benefit Advisors Insight and Analysis Blog, Danielle Capilla, Chief Compliance Officer at United Benefit Advisors. http://blog.ubabenefits.com/are-opt-outs-on-the-way-out-1

Reporting Minimum Essential Coverage

Minimum essential coverage (MEC) is the type of coverage that an individual must have under the Patient Protection and Affordable Care Act (ACA). Employers that are subject to the ACA’s shared responsibility provisions (often called “play or pay”) must offer MEC coverage that is affordable and provides minimum value.

In the fall of 2015 the IRS issued Notice 2015-68 stating it was planning to propose regulations on reporting MEC that would, among other things, require health insurance issuers to report coverage in catastrophic health insurance plans, as described in section 1302(e) of the ACA, provided through an Affordable Insurance Exchange (an Exchange, also known as a Health Insurance Marketplace). The notice also covered reporting of “supplemental coverage” such as a health reimbursement arrangement (HRA) in addition to a group health plan.

Recently, the IRS released the anticipated proposed regulations, incorporating the guidance given in Notice 2015-68. These regulations are generally proposed to apply for taxable years ending after December 31, 2015, and may be relied on for calendar years ending after December 31, 2013.

The proposed regulations provide that:

  1. Reporting is required for only one MEC plan or program if an individual is covered by multiple plans or programs provided by the same provider.
  2. Reporting generally is not required for an individual’s eligible MEC only if the individual is covered by other MEC for which section 6055 reporting is required.

These rules would apply month by month and individual by individual. Once finalized, the regulations would adopt the same information provided in the final instructions for reporting under sections 6055 and 6056 of the ACA.

Blog provided by United Benefit Advisors Insight and Analysis Blog, Danielle Capilla, Chief Compliance Officer at United Benefit Advisors. http://blog.ubabenefits.com/reporting-minimum-essential-coverage-1