Health Care Reform Updates Presented by Barb Gerken, Legislative Co-Chair

Medical Loss Ratio – Recent Activity HR 1206: “Broker Bill”  Introduced by Representatives Rogers and Barrow  Legislation to “pass” producer commissions “through” the MLR calculation  Ensures agents/brokers are not adversely impacted by the regulations  Over 170 co-sponsors

Medical Loss Ratio – Recent Activity (cont.) S 2068: Senate version of Broker Bill  “The Access to Independent Health Insurance Advisors Act of 2012”  Introduced in the Senate by Mary Landrieu, Johnny Iakson, Ben Nelson and Lisa Murkowski  Excludes the independent health insurance producer compensation from the MLR calculations

Medical Loss Ratio – Recent Activity (cont.) S 2068: Senate version of Broker Bill  Will not be identical to HR 1206 but will include improvements  Congressman Rogers and Barrow have given their support of the revised version

W2 Reporting  Additional interim guidance released by IRS on January 3, 2012  Confirms that employers filing less than 250 W-2s are not subject to requirement  Indicates that specialty coverage, if included in medical benefits, must be reported  does not impact employees’ taxable wages

W2 Reporting (cont.)  Section 6051(a) was added to the US Tax Code through PPACA  Required for 2012 W-2 Forms  Employer must report the aggregate cost of applicable employer-sponsored coverage

W2 Reporting (cont.)  Applicable coverage = coverage under any group health plan made available to the employee by an employer which is excludable from the employee’s gross income.

W2 Reporting (cont.)  Doesn’t include coverage for:  On-site medical clinics  Long-term care  Dental and vision plans independent of the medical plan  Accident only coverage or disability coverage  General liability insurance and automobile liability insurance  Worker’s compensation  Automobile medical payment insurance  Credit-only insurance  Coverage only for a specified disease or illness  Hospital indemnity or other fixed indemnity insurance

W2 Reporting (cont.)  Not required of employers filing less than 250 W-2 Forms  Does not apply to Archer MSA or health savings account contributions  Does not apply to the amount of any salary reduction contributions to a health flexible spending arrangement

W2 Reporting (cont.)  Cost is reported on Form W-2 in Box 12, using code DD  Employer may apply any reasonable method of reporting cost of coverage for terminated employee  Should include costs for employee and any dependent covered under group plan  COBRA costs are included

Essential Benefits Bulletin  States would choose one of the following benchmark plans  one of three largest small group plans in the state  one of three largest state employee health plans  one of the three largest federal employee health plan options  largest HMO plan offered in the state’s commercial market

Essential Benefits Bulletin (cont.)  PPACA requires that Essential Health Benefits include items and services in the following 10 categories Ambulatory patient servicesPrescription Drugs Emergency ServicesRehabilitative and habilitative services and devices HospitalizationLaboratory services Maternity and newborn carePreventive and wellness services and chronic disease management Mental Health and Substance Use Disorder Services, including behavioral health treatment Pediatric services, including oral and vision care

Supreme Court Hearings  Arguments are scheduled for 3 days beginning March 26  Court has scheduled 6 hours of arguments (norm is 1 hour)  Decision is expected in June, 2012

Supreme Court Hearings (cont.)  Monday - is court action premature  Tuesday - is minimum coverage requirement provisions legal  Wednesday – can rest of law can take effect without individual insurance mandate

Coverage Summaries and Material Modification Notice  General Requirements:  Group Market – health insurer is required to create and deliver summary of coverage and benefits to consumers shopping for coverage.  Must be delivered ASAP but no later than 7 days after request.  For individual, insurer’s compliance with web portal requirements satisfies the obligation

Coverage Summaries and Material Modification Notice (cont.)  General Requirements (cont.):  Summary can be up to four pages front and back  Electronic delivery is permitted. Different rules apply for individual, fully insured or ASO group  Trumps state laws that require insurers to provide less information

Coverage Summaries and Material Modification Notice (cont.)  Notice of Proposed Rulemaking released on August 17, 2011  Originally to be effective on March 23, 2012  Updated Regulations released February 10, 2012  New effective date of September 23, 2012

Coverage Summaries and Material Modification Notice (cont.)  Applies to both grandfathered and nongrandfathered plans  Applies to both fully insured and self insured plans  No-carve out available for large group market  For ASO plans, duty to issue a summary will be both the plan sponsor and its plan administrator

Coverage Summaries and Material Modification Notice (cont.)  No longer require premium information  Reduces number of coverage examples  Diabetes – well controlled  Maternity – normal delivery  Requires a statement of meeting minimum essential coverage  Requires statement of meeting actuarial value

Coverage Summaries and Material Modification Notice (cont.)  No longer need to be delivered as stand alone document for group coverage  can be included in SPD – must be intact and prominent  Must be stand alone for individual  No longer required to be printed in color  Standard template is required for first year  use best efforts to display not standard benefits

Coverage Summaries and Material Modification Notice (cont.)  Must be provided in culturally and linguistically appropriate manner  If 10% or more of population in claimants county are literate in only the same non-English language  Determined by the American Community Survey data  Currently 255 U.S. Counties meet threshold  78 in Puerto Rico

Coverage Summaries and Material Modification Notice (cont.)  Must use 12 point font  Must customize all identifiable company information throughout document (websites, phone numbers)

Coverage Summaries and Material Modification Notice (cont.)  Requires plan sponsors or issuers to provide 60 days advance notice to enrollees when making material modifications to the plan.  Plan issuers or sponsors who willfully fail to provide timely notice will be subject to a fine of $1,000 per enrollee

Coverage Summaries and Material Modification Notice (cont.)  The 60-day Notice of Material Modification does not apply to renewal of coverage.  Duty can be satisfied by providing either a separate notice describing material modification or an updated coverage summary.

Coverage Summaries and Material Modification Notice (cont.)

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