All posts in Health Care Reform

Annual Reinsurance Contribution Rate


        HHS Issues Final Notice of Benefit
        and Payment Parameters for 2016


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The Affordable Care Act (ACA) created a transitional reinsurance program to help stabilize premiums for coverage in the individual market during the first three years of Exchange operation (2014—2016). This program imposes a fee on health insurance issuers and self-insured group health plans.

The reinsurance program’s fees are based on a national contribution rate, which HHS announces annually.

     • For 2014, the annual contribution rate was $63 per enrollee.

     • For 2015, HHS lowered the annual contribution rate to $44 per enrollee.

     • For 2016, HHS lowered the annual contribution rate even more,
     to $27 per enrollee.

On Feb. 27, 2015, the Department of Health and Human Services (HHS) published its final Notice of Benefit and Payment Parameters for 2016. This final rule describes benefit and payment parameters applicable to the 2016 benefit year, including standards relating to:

     • The reinsurance program’s annual contribution rate for 2016.

     • The 2016 open enrollment period.

     • The 2016 annual limitations on cost-sharing.


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Open Enrollment Period for 2016


        HHS Issues Final Notice of Benefit
        and Payment Parameters for 2016


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The final rule sets the annual open enrollment period for non-grandfathered policies in the individual market, both inside and outside of the Exchange, for the 2016 benefit year and beyond. Under the proposed Notice of Benefit and Payment Parameters for 2016, the annual open enrollment period would have run from Oct. 1, 2015, through Dec. 15, 2015. However, the final rule modified this schedule, so that the annual open enrollment period for 2016 will begin on Nov. 1, 2015, and run through Jan. 31, 2016.

The final rule does not change the schedule for the Exchange’s open enrollment period for 2015, which ended on Feb. 15, 2015.

On Feb. 27, 2015, the Department of Health and Human Services (HHS) published its final Notice of Benefit and Payment Parameters for 2016. This final rule describes benefit and payment parameters applicable to the 2016 benefit year, including standards relating to:

     • The reinsurance program’s annual contribution rate for 2016.

     • The 2016 open enrollment period.

     • The 2016 annual limitations on cost-sharing.


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Annual Limitations on Cost-sharing


        HHS Issues Final Notice of Benefit
        and Payment Parameters for 2016


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Effective for plan years beginning on or after Jan. 1, 2014, the ACA requires non-grandfathered health plans to comply with an overall annual limit—or an out-of-pocket maximum—on essential health benefits.

The ACA requires that the out-of-pocket maximum be updated annually, based on the percent increase in average premiums per person for health insurance coverage.

     • For 2015, the out-of-pocket maximum is $6,600 for self-only coverage
     and $13,200 for family coverage.

     • Under the final rule, the out-of-pocket maximum increased for 2016
     to $6,850 for self-only coverage and $13,700 for family coverage.

HHS also clarified in the final rule that the out-of-pocket maximum applies for the plan year, and not the calendar year, for non-calendar year plans. Also, plans and issuers may, but are not required to, count out-of-network cost-sharing against the annual out-of-pocket maximum.

Finally, HHS clarified in the final rule that the annual limitation on cost-sharing for self-only coverage applies to all individuals, regardless of whether the individual is covered by a self-only plan or family coverage. In both of these cases, an individual’s cost sharing for essential health benefits may never exceed the self-only annual limitation on cost-sharing.

For example, if a family plan has an annual limitation on cost-sharing of $10,000, and one individual in the family plan incurs $20,000 in expenses from a hospital stay, that particular individual would only be responsible for paying the cost-sharing related to the costs of the hospital stay covered as essential health benefits, up to the annual limit on cost-sharing for self-only coverage (assuming an annual limitation of $6,850 for 2016, the maximum for that year).

On Feb. 27, 2015, the Department of Health and Human Services (HHS) published its final Notice of Benefit and Payment Parameters for 2016. This final rule describes benefit and payment parameters applicable to the 2016 benefit year, including standards relating to:

     • The reinsurance program’s annual contribution rate for 2016.

     • The 2016 open enrollment period.

     • The 2016 annual limitations on cost-sharing.


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ERISA Compliance: Evaluating Fees


        ERISA Compliance: Fiduciary Responsibilities

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Fees are just one of several factors fiduciaries need to consider in deciding on service providers. When the fees for services are paid out of plan assets, fiduciaries will want to understand the fees and expenses charged and the services provided.

While ERISA does not specify a permissible level of fees, the law does require that fees charged to a plan be “reasonable.” After careful evaluation during the initial selection, the plan’s fees and expenses should be monitored to determine whether they continue to be reasonable.

In comparing estimates from prospective service providers, employers should ask which services are covered for the estimated fees and which are not. Some providers offer a number of services for one fee, sometimes referred to as a “bundled” services arrangement. Others charge separately for individual services. Employers should compare all services to be provided with the total cost for each provider and consider whether the estimate includes services the employer did not specify or want. Remember, all services have costs.

Some service providers may receive additional fees from third parties, such as insurance brokers. Employers should ask prospective providers whether they get any compensation from third parties, such as finder’s fees, commissions or revenue sharing.

Plan expenses may be paid by the employer, the plan or both. In any case, the plan document should specify how fees are paid, and the fiduciary must ensure that those fees and expenses are reasonable, necessary for the operation of the plan, and not excessive for the services provided.

The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for employee benefit plans maintained by private-sector employers. ERISA includes requirements for both retirement plans (for example, 401(k) plans) and welfare benefit plans (for example, group health plans). ERISA has been amended many times over the years, expanding the protections available to welfare benefit plan participants and beneficiaries.

ERISA includes standards of conduct for those who manage an employee benefit plan and its assets, who are called “fiduciaries.” This Legislative Brief includes a set of frequently asked questions (FAQs) to help employers understand the basic fiduciary responsibilities applicable to group health plans under ERISA.


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Minimum Value—Closed Loophole for Low-cost Employer Plans


        HHS Issues Final Notice of Benefit
        and Payment Parameters for 2016


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Under the ACA, minimum value (MV) of an employer-sponsored plan is significant for a number of purposes. Beginning in 2015, certain large employers may be penalized if the health plans they offer do not provide MV. Also, an individual who is offered employer-sponsored coverage that is affordable and provides MV may not receive a subsidy for coverage through an Exchange. HHS and the Internal Revenue Service (IRS) have provided four methods for determining a plan’s MV, including an online MV Calculator.

On Nov. 4, 2014, the IRS issued Notice 2014-69 to clarify that plans that do not provide inpatient hospitalizations or physician services (referred to as Non-hospital/Non-physician Services Plans) do not provide the MV intended by the ACA.

Consistent with Notice 2014-69, the final rule provides that, in order to provide MV, a plan must not only cover a predicted 60 percent of the allowed costs under the plan, but it must also provide a benefits package that reflects benefits historically provided under “major medical” employer coverage. Specifically, to satisfy the MV requirement, coverage must include substantial coverage of both inpatient hospital services and physician services.

On Feb. 27, 2015, the Department of Health and Human Services (HHS) published its final Notice of Benefit and Payment Parameters for 2016. This final rule describes benefit and payment parameters applicable to the 2016 benefit year, including standards relating to:

     • The reinsurance program’s annual contribution rate for 2016.

     • The 2016 open enrollment period.

     • The 2016 annual limitations on cost-sharing.


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Individual Mandate: Affordability Exemption


        HHS Issues Final Notice of Benefit
        and Payment Parameters for 2016


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Under the ACA, individuals who lack access to affordable minimum essential coverage (MEC) are exempt from the individual mandate. For purposes of this exemption, coverage is affordable for an employee if the required contribution for the lowest-cost, self-only coverage does not exceed 8 percent of household income. This required contribution percentage is adjusted annually after 2014.

     • For 2015, coverage is unaffordable for purposes of the individual
     mandate exemption if it exceeds 8.05 percent of household income.

     • For 2016, the final rule provides that, if an individual must pay more than
     8.13 percent of his or her household income for MEC, that individual is exempt
     from the individual mandate penalty.

On Feb. 27, 2015, the Department of Health and Human Services (HHS) published its final Notice of Benefit and Payment Parameters for 2016. This final rule describes benefit and payment parameters applicable to the 2016 benefit year, including standards relating to:

     • The reinsurance program’s annual contribution rate for 2016.

     • The 2016 open enrollment period.

     • The 2016 annual limitations on cost-sharing.


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Medical Loss Ratio Rebates


        HHS Issues Final Notice of Benefit
        and Payment Parameters for 2016


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The ACA’s medical loss ratio (MLR) rules require health insurance issuers to spend 80 to 85 percent of their premium dollars on medical care and health care quality improvement activities, or pay rebates to enrollees.

The final rule requires that subscribers of nonfederal governmental or other group health plans not subject to ERISA receive the benefit of MLR rebates within three months of receipt of the rebate by their group policyholder, just as subscribers of group health plans subject to ERISA do. In addition, the final rule includes technical clarifications to ensure that issuers correctly exclude federal and state employment taxes, as well as the cost-sharing reduction payments issuers receive from HHS, from MLR and rebate calculations.

On Feb. 27, 2015, the Department of Health and Human Services (HHS) published its final Notice of Benefit and Payment Parameters for 2016. This final rule describes benefit and payment parameters applicable to the 2016 benefit year, including standards relating to:

     • The reinsurance program’s annual contribution rate for 2016.

     • The 2016 open enrollment period.

     • The 2016 annual limitations on cost-sharing.


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Small Business Health Options Program (SHOP)


        HHS Issues Final Notice of Benefit
        and Payment Parameters for 2016


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The final rule includes provisions to streamline administration of the SHOP. For example, the final rule:

     • Allows SHOPs to assist employers in the administration of continuation
     coverage (COBRA)
enrolled in through a SHOP

     • Allows a SHOP to elect to renew an employer’s offer of coverage, where
     the employer remains eligible to participate in the SHOP and has taken no action
     to modify its offer of coverage or withdraw from the SHOP during its annual
     election period, so long as the offered coverage remains available through
     the SHOP

     • Modifies the calculation of minimum participation rates in the SHOP to
     align with the current practice of issuers in many states and to include other
     types of coverage in the calculation of the group’s rate (this policy is limited to
     the federally facilitated SHOP, effective for plan years beginning on or after
     Jan. 1, 2016; states may decide how to calculate minimum participation rates for
     state SHOPs and the non-SHOP small group market)

     • Aligns SHOP qualified health plan (QHP) certification in SHOPs that certify
     QHPs on a calendar year basis with rolling enrollment in the SHOP, so that
     employers can start coverage through the SHOP at the beginning of any
     month, with coverage lasting for 12 months

     • Finalizes an exception to the rule regarding 12-month plan years in the
     SHOP for states with merged individual and small group risk pools under federal
     law

     • Specifies that a qualified employer that fails to pay its premium for federally
     facilitated SHOP coverage in a timely manner can be reinstated in its prior
     coverage only once per calendar year

     • Specifies that, effective Jan. 1, 2016, certain termination notices will be
     provided by the SHOP.

On Feb. 27, 2015, the Department of Health and Human Services (HHS) published its final Notice of Benefit and Payment Parameters for 2016. This final rule describes benefit and payment parameters applicable to the 2016 benefit year, including standards relating to:

     • The reinsurance program’s annual contribution rate for 2016.

     • The 2016 open enrollment period.

     • The 2016 annual limitations on cost-sharing.


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How to File for an Individual Mandate Exemption


        The Individual Mandate Exemptions

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If you think you qualify for an exemption to the individual mandate, you will need to file for an exemption. Visit www.healthcare.gov/exemptions/ to access the exemption application. If you receive an exemption, make sure you keep the letter sent to you from the Marketplace with your exemption certificate number (ECN).You will need your ECN when you file your taxes in order to use the exemption.

Although most exemptions must be obtained through the exemption application in the Marketplace, a few are available when you file your federal income tax return. For example, if you have a gap of coverage for fewer than three months, you will access this exemption when you file your federal income tax return and do not need to apply for an exemption through the Marketplace.

One of the key components of the Affordable Care Act (ACA) is that everyone is required to obtain health coverage. If you don’t have coverage, you are not only responsible for paying all of your health care expenses out of pocket, but you will also be subject to a fee. However, in a few special situations, you may qualify for an exemption from the penalty.


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Individual Mandate Exemption Qualifications


        The Individual Mandate Exemptions

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If you don’t have coverage, there are some situations in which you may be exempt from paying the penalty fee.

You may qualify for an exemption if the following applies:

     • You lack coverage for less than three months of the year.

     • The lowest-priced insurance available costs more than 8 percent
     (8.05 percent for 2015) of your household income.

     • You don’t have to file a tax return because your income is too low.

     • You’re a member of a federally recognized tribe, or you are eligible for
     services through an Indian Health Services provider.

     • You’re a member of a recognized health care sharing ministry.

     • You’re a member of a recognized religious sect with religious objections
     to insurance, including Social Security and Medicare.

     • You’re incarcerated and not awaiting the disposition of charges.

     • You are not lawfully present in the United States.

You may also qualify for a hardship exemption if one of the following circumstances applies to you, affecting your ability to purchase health coverage:

     • You were homeless.

     • You were evicted, or faced eviction or foreclosure, in the past six months.

     • You received a shut-off notice from a utility company.

     • You recently experienced domestic violence.

     • You recently experienced the death of a close family member.

     • You suffered a fire, flood or other natural or human-caused disaster
     that caused substantial damage to your property.

     • You filed for bankruptcy in the past six months.

     • You had medical expenses you couldn’t pay in the last 24 months.

     • You experienced unexpected increases in necessary expenses due to
     caring for an ill, disabled or aging family member.

     • You expect to claim a child as a tax dependent who has been
     denied coverage in Medicaid and CHIP, and another person
     is required by court order to give medical support to the
     child. In this case, you do not have to pay the penalty for
     the child.

     • As a result of an eligibility appeals decision, you’re eligible
     for enrollment in a qualified health plan (QHP) through the
     Marketplace, lower costs on your monthly premiums or
     cost-sharing reductions for a time period when you weren’t
     enrolled in a QHP through the Marketplace.

     • You were determined ineligible for Medicaid because your state didn’t
     expand eligibility for Medicaid under the ACA.

     • Your individual insurance plan was cancelled, and you believe other
     Marketplace plans are unaffordable.

     • You experienced another similar hardship in obtaining health insurance.

One of the key components of the Affordable Care Act (ACA) is that everyone is required to obtain health coverage. If you don’t have coverage, you are not only responsible for paying all of your health care expenses out of pocket, but you will also be subject to a fee. However, in a few special situations, you may qualify for an exemption from the penalty.


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