EServing
UCLID MANAGERS
the independent agent since 1976
®
A Legislative Review Service by Euclid Managers
August 2010
EUCLID MANAGERS®
has served the independent agent
since 1976, offering a portfolio
of group health, professional
liability, individual life, health,
annuity and long-term
care products.
We proudly represent many
fine carriers including
Group Products:
UnitedHealthcare of Illinois
Delta Dental of Illinois
MetLife
Individual Products:
American General Life Companies
AXA/Equitable
Banner Life
Genworth Financial Insurance Co.
Guarantee Trust Life
HumanaOne
John Hancock Life
Lincoln National Life
MetLife
Prudential Financial
RBC Insurance
Transamerica
West Coast Life
…and many more!
Contact Information
Reflections
September Means Health Reform Changes
September has traditionally been thought of as “back-to-school." However,
given that many of the changes dictated by the Affordable Care Act (ACA),
that begin with plans that renew on or after September 23, back-to-school
may be all but forgotten.
This issue of Reflections provides an overview of the provisions that begin to
take effect on September 23, 2010. It’s important to note that some of these
provisions may not apply to “grandfathered plans" or may be delayed if a
plan has that status. Brokers and employers should refer to the law and any
rules for greater clarification and specificity.
continued on page 2
A letter from Karen Knippen
Keeping up with the Affordable Care Act is becoming a full time job. We’ve
already seen several sets of rules issued – with more to come. And, then
there will be clarifications and changes to the rules based on comments.
We have an edge though. As insurance professionals we understand most
of the terms and the underlying principles and how they apply to health
insurance plans. Many of our clients don’t have a clue. You are the one
they turn to explain the impact and the options.
Do be careful! Unless you are an attorney or an accountant, beware of
giving legal or tax advice. Be prepared to recommend such expertise when
called for.
Sincerely yours,
234 Spring Lake Drive
Itasca, Illinois 60143
Phone: (630) 238-1900
Outside Chicagoland:
(800) 345-7868
Fax: (630) 773-8790
Visit us at:
www.euclidmanagers.com
Karen Knippen, RHU, REBC, CLTC
EUCLID MANAGERS® has been serving the independent agent since 1976 with a portfolio of group health, professional
liability and individual life and health, annuity and long-term care products. We proudly represent UnitedHealthcare,
Delta Dental of Illinois, MetLife and HumanaOne. We encourage your feedback and suggestions. Please call your
EUCLID MANAGERS® Marketing Representative or Marcy Graefen at (630) 238-2915 for more information. Outside
Chicagoland, call (800) 345-7868. Website: www.euclidmanagers.com
Consumer Protection Provisions
Plans effective on or after September 23, 2010 are
prohibited from imposing any preexisting condition
exclusions on enrollees under age 19. In most cases,
this will mean changes for dependents. However,
employers should be aware that this provision applies
equally to any employees who meet the age requirement.
The ban includes both benefit limitations and outright
coverage denials.
Also of importance is that any persons meeting this
age limit and already under the plan and subject to a
preexisting condition waiting period will be affected.
A plan with a six month waiting period that comes
under the provision will have to shorten the period for
these individuals. Preexisting conditions limits on all
plan participants will be eliminated in 2014.
Dependents must be covered to age 26 for plan years
beginning on or after September 23, 2010. Coverage
does not have to be extended to spouses or children
of these “adult children." Some insurance carriers
have already announced that they will provide this
coverage sooner than the law requires to make
implementation smoother.
To blunt the cost of keeping dependents on a plan,
some benefit experts suggest that employers consider
a “unit pricing" premium model for dependents. Unit
pricing sets premiums per added person covered by a
plan. A person with three dependents, for example,
would pay less than someone with five dependents.
The tax status of these dependents has largely been
resolved. The IRS issued a notice, 2010-38, extending
tax-favored status to adult children until age 27. IRS
officials used the age of 27 to avoid situations where
a dependent’s coverage did not terminate on the exact
date of their attaining age 26.
The notice also states that FSAs may be amended to
cover expenses for these dependents. Rules will be
forthcoming.
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Reflections
Lifetime limits on “essential health benefits" will also
be prohibited. Annual dollar limits may be implemented
in lieu of lifetime limits. However, annual dollar limits
will be excluded beginning in 2014.
Questions remain regarding a complete definition of
“essential health benefits." The statute provides some
guidance including: hospitalization, ambulatory
services, emergency services, mental health services
and other services commonly covered by employerprovided plans.
Plans will be required to provide a re-enrollment
opportunity to any individual who had already
reached a lifetime maximum.
Annual dollar limits are subject to new restrictions,
leading to a phase out of dollar limits over the next
three years until 2014 when the Affordable Care Act
bans them for most plans. Plans issued or renewed
beginning September 23, 2010, will be allowed to set
annual limits no lower than $750,000. This minimum
limit will be raised to $1.25 million beginning
September 23, 2011, and to $2 million beginning on
September 23, 2012. These limits apply to all employer
plans and all new individual market plans.
HHS has promised to provide additional guidance
and a waiver program for mini-med plans. They
came to realize that mini-med plans may be the most
affordable option currently available in some cases.
Insurers will face limitations on rescinding coverage
as of this September. Rescissions will only be allowed
in cases of fraud and “intentional misrepresentation
of material facts."
If an insurer or plan attempts to rescind coverage it
must provide at least 30 days advance notice.
Individuals will have a right to appeal this action.
Plans will also be subject to a new external review
process. Decisions that can be appealed include:
denials based on medical necessity, health care
setting, level of care or effectiveness of a covered
benefit, among others. Appeals are heard by outside,
independent decision-makers. Even internal appeals
processes will need to be revised. For example,
information must be provided giving details for a
denial of coverage. Health plans will be required to
pay the cost of an external appeal.
Preventive Services and
Patient Protections
Plans will be required to provide coverage for
preventive care services without deductibles, co-pays
or coinsurance when provided by a network provider.
Rules were recently issued providing details of which
services are considered “preventive."
The list of “preventive" services is extensive. For
adults services include:
• Screening for men for an abdominal aortic
aneurysm
• Depression screening
• Diet counseling for adults at higher risk of
chronic disease
• Obesity screening and counseling
• Tobacco use screening and cessation interventions
• Breast feeding interventions to support and
promote breast feeding
• Various maternity related services.
The list of “preventive services" for children includes:
• Alcohol and drug use assessments for adolescents
• Autism screening for children at 18 and 24 months
• HIV screening for adolescents at high risk
• Iron supplements for children ages 6 to 12
months at risk for anemia
• Obesity screening and counseling
• Oral health risk assessments
• Vision screening
Other rules dubbed “patient protections" allow
individuals to designate an OB/GYN or pediatrician as
a primary care doctor. Emergency services will also not
be subject to prior approval requirements or out-of-
network cost sharing provisions. Out–of-network
providers may “balance bill" if the plan pays an
amount based on negotiated in-network rates or other
allowable payment options. The rules provide three
formulas for determining allowable payments.
Three model notices have been developed by HHS to
address coverage for dependents, lifetime limits and
patient protections.
Nondiscrimination Testing
Insured plans will be subject to nondiscrimination
testing as of September. Self-funded plans have been
subject to these requirements for some time. Put simply,
the tests are intended to ensure that benefits do not
favor highly compensated employees. Plans that cover
most – or all- employees with the same rules for
eligibility and employer contributions should have
little difficulty meeting the test.
Other plans that were established to effect select
groups or subsets of employees will likely not pass
muster. Typical plans that may need to be revised,
unless they are grandfathered, will be medical expense
reimbursement plans and long term care plans that
cover only a select group of employees or executives.
Details are Important
The ACA and the rules implementing it are complex
and changing. Therefore, facts and circumstances are
critical in understanding how a particular employer or
plan will be impacted.
Of particular importance is whether a plan has
determined that it is a “grandfathered" plan. This is a
threshold question to consider before determining
which provisions – if any – apply to a particular plan.
A number of provisions are delayed for such designated plans. However, maintaining "grandfathered" status
is complicated in and of itself. It’s also important to
note that one employer may have multiple plans some
of which may have "grandfathered" status and some
that may not.
Reflections
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EServing
UCLID MANAGERS
the independent agent since 1976
®
A Legislative Review Service by Euclid Managers
August 2010
Reflections
A service publication for brokers from
Euclid Managers®, proudly representing
UnitedHealthcare of Illinois, Delta Dental of Illinois,
MetLife and HumanaOne.
EUCLID MANAGERS
®
Serving the independent agent since 1976
Visit us online www.euclidmanagers.com.
Editor: Pamela D. Mitroff
Legislative Review is published by Euclid Managers®, 234 Spring Lake Drive., Itasca, IL 60143. For more information, contact your Marketing Representative or Marcy Graefen
at (630) 238-2915 or fax your request to (630) 773-8790. Outside Chicagoland: (800) 345-7868, Fax (877) 444-2250. © Permission to quote with credit to source.
September Means Health Reform Changes
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EServing
UCLID MANAGERS
the independent agent since 1976
®