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National health care reform provisions

$0 Wellness

IMPACT

Under the ACA, preventive care—such as annual wellness visits, certain screenings, and immunizations—must be covered with no cost sharing (e.g., coinsurance, deductible or copayment) for services provided in-network.

Since 2005, Fallon Health has made $0 Wellness a part of all our standard plan designs. We understand the value of routine preventive exams and were ahead of the curve in allowing every member to take full advantage of this important benefit.

TIMING

This provision was effective September 23, 2010. 

Early Retiree Reinsurance Program

The Early Retiree Reinsurance Program (ERRP) provides reimbursement to participating employment-based plans for a portion of the costs of health benefits for early retirees and early retirees’ spouses, surviving spouses, and dependents. The program was authorized in the Patient Protection and Affordable Care Act.

Key points

What is the purpose of the Early Retiree Reinsurance Progam?

The purpose of ERRP is to make health benefits more affordable for plan participants and sponsors so that health benefits are accessible to more Americans. The reimbursement may be used to reduce the sponsor’s health benefit premiums or health benefit costs, to reduce health benefit premium contributions, copayments, deductibles, coinsurance, and other out-of-pocket costs for plan participants, or to reduce any combination of these costs.

What you need to know

How to participate

Applications are no longer being accepted for the Early Retiree Reinsurance Program.

How can the reimbursement be used?

The reimbursement can only be used to reduce the sponsor’s health benefit premiums or health benefit costs, to reduce health benefit premium contributions, copayments, deductibles, coinsurance, and other out-of-pocket costs for plan participants, or to reduce any combination of these costs. Payments can not be used as revenue or as gross income.

How are Fallon plans affected?

FCHP can upload the Early Retiree detailed claim data file to the ERRP Web site on behalf of plan sponsors, if desired.

For more information about the Early Retiree Reimbursement Program, download the PDF fact sheet:
Early Retiree Reinsurance Program (pdf, 81 KB)

Grandfathered plans

The interim final rule for group health plans and health insurance coverage relating to status as a grandfathered plan under the Patient Protection and Affordable Care Act Rule addresses what changes an insurer or plan sponsor may make to health insurance coverage or a group health plan without loss of its "grandfather" status under the Patient Protection and Affordable Care Act ("PPACA") and what administrative steps a plan must take to maintain grandfather status.

Key points

Why might a group want to be grandfathered?

A group may want to maintain grandfather status so as not to have to comply with certain provisions of the PPACA.

What you need to know

Employers

To be a grandfathered plan, the policy or group health plan must have had at least one individual enrolled in coverage on March 23, 2010, and the policy or plan must have continuously covered someone since March 23, 2010 (even if it's not the same individual or set of individuals).

Any new policy, certificate or contract of insurance (versus renewal) issued after March 23, 2010 is not grandfathered.

Brokers

Any insurance policy sold to new entities or individuals after March 23, 2010, will not be grandfathered, even if the product was offered in the group or individual market before March 23, 2010.

Grandfathered plans (pdf, 86 KB)

Medical Loss Ratio (MLR)

IMPACT

The ACA set minimum Medical Loss Ratio (MLR) standards of 80% for the non-group and small group markets and 85% for the large group market, effective for calendar year 2011. In 2010, Massachusetts enacted a higher state-specific standard for the non-group and small group markets. The standard was set at 88%, to be in effect for calendar years 2011 and 2012.

TIMING

This provision became effective for calendar year 2011.

Notice to Employees of Exchange Coverage Options

IMPACT

The ACA provision that created this requirement was written into a federal law called the Fair Labor Standards Act (FLSA). Any employer who is subject to the FLSA must comply with this new requirement. This generally includes employers who have an annual volume of business of $500,000 or greater. Certain types of employers are covered by the FLSA, regardless of volume (e.g., hospitals, schools and government entities). Notices only need to be provided to employees; separate notices do not need to be provided for dependents.

New hires must receive the notice within 14 days of their start date. It must be issued to all employees, regardless of whether they are full-time or part-time, and whether they are eligible for, or enrolled in, health insurance.

The DOL supplied a model notice that can be used. There are two versions. The first is for employers who offer health coverage to their employees. Find it here: http://www.dol.gov/ebsa/pdf/flsawithplans.pdf. The second is for employers who do not offer health coverage to their employees. Find it here: http://www.dol.gov/ebsa/pdf/flsawithoutplans.pdf The Massachusetts Health Connector has also published its own version of a model exchange notice that Massachusetts employers may use to satisfy the ACA marketplace notification requirement. The use of this particular form is entirely optional for Massachusetts employers. There is one version for all employers. Find it here: http://bettermahealthconnector.org/marketplace-notice/.

TIMING

On May 8, 2013, the Department of Labor (DOL) issued guidance on this requirement in the form of a technical release. You can find it here:

http://www.dol.gov/ebsa/pdf/tr13-02.pdf
. It is characterized as “temporary guidance.” Final regulations have still not been released. This notice had to be delivered to all current employees by October 1, 2013. Employers were also required to begin issuing it to newly hired employees by the same date.

Preventive care services

Within the Patient Protection and Affordable Care Act (PPACA), also known as Health Care Reform (HCR), there is a requirement to cover certain preventive care services and tests in full, as long as they are administered by in-network providers.

Fallon Health will implement the preventive care requirements for all our plans that are not “grandfathered” and for our customers who wish to comply with the rule voluntarily. Please visit https://www.healthcare.gov/preventive-care-benefits/ for lists of the specified preventive care services that are covered without copayments, deductibles, or coinsurance (as long as they are administered by in-network providers).

W-2 Requirements

IMPACT

The ACA requires employers to report the aggregate cost of health coverage on their employees’ W-2 forms. This is for informational purposes only.

The IRS implemented this provision for tax year 2012 (the W-2s that were issued in early 2013) for employers who issue more than 250 W-2s. It is unclear if it will be extended to employers who issue fewer than 250 W-2s in future years. More detailed information about this requirement is available on the IRS website, http://www.irs.gov.

TIMING

For employers who issue more than 250 W-2s, the W-2 Requirements provision took effect for the W-2s issued for tax year 2012.

Women’s Preventive Care

IMPACT

Under the ACA, women’s preventive health care—such as mammograms, screenings for cervical cancer, prenatal care, and other services—must be covered with no cost sharing (e.g., coinsurance, deductible or copayment) for services provided in-network. Fallon is in compliance with all aspects of the Women’s Preventive Care requirements of the ACA. Most notably, members can now receive contraception at $0 copay as well as breast pumps for nursing mothers at no charge. Fallon is proud to note that breast pumps were included as part of our Oh Baby! program for a number of years prior to this requirement.

TIMING

This provision was effective August 1, 2012.

Massachusetts legislation

Autism coverage

“An Act Relative to Insurance Coverage for Autism”, HB 4935, mandates insurers to offer coverage for an expanded range of autism services, at coverage limits that are equal to those for physical conditions, and with no limits to the number of visits to an autism services provider. The law is effective on policy anniversary dates on or after January 1, 2011. Self-insured plans are exempt.

The law mandates that insurers cover the cost of diagnosis and treatment of certain autism spectrum disorders. Treatments include rehabilitative, psychiatric and therapeutic care, assessments and evaluations, applied behavioral analysis and pharmacy care.

More information about the Autism Mandate (pdf, 50 KB)

Chapter 224 Wellness Programs

IMPACT

Chapter 224 includes several provisions concerning wellness programs, including the opportunity for tax credits for employers who implement wellness programs.

The Department of Public Health (DPH) released final regulations on the tax credit program, along with Program Guidance and an online application.

Fallon has always focused on member wellness, including the introduction in 2013 of The Healthy Health Plan—a comprehensive wellness program featuring online and telephonic capabilities to offer employers a robust solution that engages and manages members while rewarding them for being, and becoming, healthy.

Go to http://www.mass.gov/eohhs/consumer/wellness/health-promotion/massachusetts-wellness-tax-credit.html for more information.

TIMING

The tax credit program took effect for tax year 2013. Applications go through the DPH.

Children’s Health Insurance Program Reauthorization Act Of 2009 (CHIPRA)

The law is designed to provide health coverage for children in families who are above the Medicaid income level, but whose incomes are too low to purchase private health coverage.

  • Expanded the program formerly known as the State Children’s Health Insurance Program (“CHIP”), now renamed Children’s Health Insurance Program (“CHIP”).
    • Establishes new options for pregnant women.
    • Limits adult coverage options and prohibits new waivers.
    • Requires states to include dental coverage.
    • Allows states to cover more people (up to 300% of poverty level).
    • Allows states to provide premium assistance.
    • Provides for two new “special enrollment” events.
    • Adds new employer notice obligations.
    • Adds duty to respond to state requests for information.
  • Funded by state and federal governments.
  • States determine eligibility, benefits, etc., subject to maximum limits (generally, 300% of poverty level).
  • 60-day special enrollment right (effective April 1, 2009) for employees and their dependents if:
    • they lose eligibility and coverage from Medicaid or CHIP (contrast with 30 days for other loss of coverage or other qualifying events), or
    • they are eligible for a premium subsidy from Medicaid or CHIP.
  • States may subsidize the cost of health coverage for children under an employer’s group health plan.
  • Employers are required to provide notice to each employee, regardless of enrollment status, by the later of: (1) the first day of the first plan year on or after February 4, 2010; or (2) May 1, 2010.
  • Notice must be sent annually before the start of each plan year. A model notice is available from the Department of Labor at dol.gov/ebsa or by calling EBSA toll-free at 1-866.444.3272.

What do employers and health plans need to do?

  • Amend health and cafeteria plans (effective April 1, 2009) if they conflict with the new HIPAA Special Enrollment Rights under CHIPRA.
  • Update all communications and plan information to reflect the new special enrollment rights.
  • Begin sending required annual notice to employees by the later of:(1) the first day of the first plan year on or after February 4, 2010; or (2) May 1, 2010.

Continuity of care regulations for insureds in limited network plans (pdf)

Fair share contribution reporting

State health insurance legislation (Chapter 58 of the Acts of 2006) enacted in April 2006 contained new obligations for Massachusetts employers who employ 11 or more full-time equivalent employees. These employers must file a Fair Share Contribution (FSC) report quarterly.

If employers do not contribute to health insurance for their employees at levels specified by the regulation, they must make a Fair Share Contribution to the Commonwealth Care Fund, payable to Division of Unemployment Assistance (DUA).

About filing

In order to determine whether you as an employer are liable for Fair Share Contributions, you must meet the criteria outlined below.

How many of these criteria you must meet is based upon how many employees your business has:

  • Employers with more than 11 full-time equivalent employees but less than 50 must meet both of the following criteria.
  • Employers with more than 50 employees, must meet only one of the following criteria.
Employers must offer all full-time employees (defined as working the lesser of 35 hours/week or the minimum payroll hours to be eligible for the benefit plan for full-time employees) with access to a health insurance plan where the employer contributes at least 33% towards the single premium
and
at least 25% of the employer’s eligible population must take the health insurance

or


75% of the employer’s eligible population must take the health insurance.

In addition to the FSC filing, employers are required to file an Employer Health Insurance Responsibility Disclosure (HIRD) Report. This may be filed with the FSC quarterly filing.

Employers can go online to https://fsc.detma.org to begin the filing process for both the FSC and HIRD, or for more information.

Genetic Information Nondiscrimination Act (GINA)

Employers should be aware of a significant statute that imposes new nondiscrimination requirements on group health plans, employers and insurers: the Genetic Information Nondiscrimination Act (GINA).

Broadly, GINA prohibits:

  • the use of genetic information in making employment-related decisions;
  • the intentional acquisition of genetic information about applicants and employees;
  • retaliation based on genetic information; and
  • it imposes strict confidentiality requirements.

Group health plans and health insurers may not request or require the provision of genetic information of an individual or the individual's family members, and may not use genetic information for decisions regarding coverage, costs of coverage or pre-existing conditions. GINA bars collection of genetic information prior to the date the employee or beneficiary becomes covered under the plan.

For group health plans and insurers, the law is effective for plan years beginning on or after May 21, 2009. However, federal agencies recently released regulations implementing the law, which are effective for plan years beginning on or after December 7, 2009. (In both cases, requirements apply to calendar-year plans on January 1, 2010).

GINA specifically prohibits plans or insurers from:

  • increasing the group premium or contribution amounts based on genetic information;
  • requesting or requiring a person to undergo a genetic test;
  • requesting, requiring or purchasing genetic information prior to, or in connection with, enrollment; or
  • requesting, requiring or purchasing genetic information at any time for underwriting purposes.

(Note: Wellness programs that provide any kind of reward to members for completing a health risk assessment (HRA) may be in violation if they request information on family medical history, which is considered to be genetic information.)

What should businesses do now?

  • Review plans to make sure they are consistent with these rules.
  • Conduct a compliance review to ensure that HRAs and associated policies and procedures comply with GINA’s prohibition on using genetic information prior to or in connection with enrollment or for underwriting purposes, and to make any necessary changes.
  • Update training materials and supplement training for HR employees and others with access to protected information and employee data.

Infertility coverage mandate expanded

The health care cost-control law (Chapter 288 of the Acts of 2010) includes a provision that expands the definition of, and coverage for, infertility. The law redefines fertility to mean the condition of an individual who is unable to conceive or produce conception during a period of 1 year if the female is age 35 or younger, or during a period of 6 months if the female is over the age of 35.

Massachusetts was the first state in the nation in 1987 to enact a mandate to cover fertility treatments and procedures and has the most comprehensive coverage of the 15 states that now mandate it. It covers IVF, IUI, GIFT, ZIFT, and sperm and egg retrieval, but does not include experimental procedures or the cryopreservation of eggs.

Mental Health and Substance Abuse Equity Act

The law says that group health plans offering mental health or substance abuse benefits cannot place more restrictions on those benefits than on medical/surgical benefits under the plan.

The law was effective for the first plan year beginning on or after October 3, 2009 (January 1, 2010 for calendar year plans). However, federal agencies issued regulations implementing the law on February 2, 2010, which are effective on the first plan year beginning on or after July 1, 2010. (In both cases, there is a delay in the effective date for certain union plans.)

What group health plans must comply?

  • Any insured or self-insured plan that offers mental health or substance abuse benefits must comply.
  • There’s an exception for small plans—50 or fewer employees—but state parity laws will continue to apply.
  • There’s an annual exemption where costs increase (1% or 2%, depending on plan year), but you must comply for six months and apply for exemption for the following year.
  • There’s an exception for most on-site clinics, and hospital indemnity and specified-disease insurance policies.

What do health plans need to do?

  • Review plan to determine if any coverage changes are needed (coordination of multiple options).
  • Amend plan/policies as necessary.
  • Modify plan notices as needed.
  • Disclose required information upon request.

Reporting requirements for group health plans

Employers who sponsor group health plans, and certain other responsible persons, must self-report and pay excise taxes when they fail to comply with various group health plan mandates. Prior to these new regulations, taxes applied, but there was no imposed obligation to self-report.

This new reporting obligation applies to violations of many regulatory requirements. Examples of affected requirements include: COBRA, GINA, HIPAA (portability, access and renewability provisions; nondiscrimination based on health status), Mental Health Parity, Michelle's Law (coverage for dependent students who would otherwise lose eligibility due to medically necessary leave of absence) and Newborn's and Mother's Health Protection Act (minimum hospital stays for maternity).

Use IRS Form 8928, which is due by the deadline for filing the federal income tax return for the taxable year, with no extensions.

Amount of tax

  • Generally, the tax is $100 per day for each day in the "noncompliance period" for each affected individual. The noncompliance period begins on the day the failure first occurred and ends on the day the failure was corrected
  • Maximum tax for unintentional failures:
    • If failure to report is due to reasonable cause and not willful neglect, the maximum tax is the lesser of $500,000 or 10% of aggregate amount paid or incurred by the employer during preceding taxable year for group health plans.
    • If failure is intentional, there is no cap on the amount of tax imposed.
  • Tax may be waived if you can show the IRS:
    • You didn't know, and in exercising reasonable diligence would not have known, that the failure existed.
    • Failure is due to reasonable cause and not willful neglect, and failure is corrected within a 30-day period beginning on the first date you knew (or in exercising reasonable diligence would have known) that the failure existed. Correction requires placing the affected individuals in the same or better position as if the failure had not occurred.
  • All or part of the tax could be waived to the extent the tax would be excessive relative to the failure.

A portion of the law also covers comparable employer contributions for HSAs or Archer MSAs; different rules apply.

Massachusetts Section 125 Requirement

IMPACT

Section 125 plans, named for the section of the federal internal Revenue Code that governs them, allow certain employee benefits to be purchased on a pre-tax basis.  Previously, Massachusetts state health care reform required all employers with 11 or more full-time employees (FTE) to offer a Section 125 plan to most of their employees, even those who do not work enough hours to qualify for employer-sponsored health insurance benefits (some exclusions did apply).

This requirement was repealed, effective March 17, 2014, after it was determined to be incompatible with provisions of the ACA. Federal guidance issued by the Department of Labor and the Internal Revenue Service via Technical Release 2013-03 and IRS Notice 2013-54 indicates that under the Affordable Care Act, starting in 2014, employers can no longer offer Section 125 (or “cafeteria”) plans to employees to purchase non-group health insurance without an employer contribution.The related Employer Health Insurance Responsibility Disclosure (Employer HIRD) requirement, Free Rider Surcharge, and recently created Section 125 notification requirement were also repealed.

TIMING

For plan years starting in 2014, under federal guidance, employers may no longer offer Section 125 plans that permit their non-benefits eligible employees to purchase their own non-group health insurance policies using pre-tax income.

The federal guidance states that individuals may use Section 125 plans to continue paying for plans with a plan year that commenced in 2013.

Employers that currently permit non-benefits eligible employees to use Section 125 plans to purchase individual health plans on a pre-tax basis may leave those plans in place until the expiration date of the employee’s plans in 2014. To qualify for the extension beyond January 1, 2014, a plan must have been in existence and operating on a plan year basis as of the date the federal guidance was released (September 13, 2013). A plan cannot be established or modified after that date in order to take advantage of the guidance.

Security regulations

On Monday, March 1, 2010, regulations to protect the security of personal information of Massachusetts residents went into effect. These regulations can be found at 201 CMR 17.00, and are called the “Standards for the Protection of Personal Information of Residents of the Commonwealth.”

Personal information is defined as a Massachusetts resident’s first name, last name and either Social Security number, credit card number or other financial account number. All businesses that maintain this type of information, including health plans, providers, employers, and stores—from the corner store to large department stores—must comply with the new regulations. The security safeguards that must be implemented under these regulations include, but are not limited to:

  • Development of a company-wide security plan
  • Encryption of email that contains personal information
  • Encryption of portable media (laptops, back-up tapes) that store personal information
  • Development and implementation of policies and procedures
  • Update contracts to require service providers to implement security measures that are consistent with these regulations.

Fallon Health closely followed the drafting and enactment of these Massachusetts regulations. The final regulation no longer requires owners or licensees of personal information to obtain written certifications from service providers that they have written information security programs. However, the regulation does require owners and licensees of personal information to require service providers, by contract, to implement and maintain appropriate security measures for personal information.

Current contracts or agreements (entered into by March 1, 2010) must be amended on or before March 1, 2012. New contracts entered into with service providers after March 1, 2010, must include language requiring the service providers to implement and maintain appropriate security measures.

Fallon is in compliance with 201 CMR 17.00 and has in place appropriate security measures to protect personal information. As part of our compliance activities, Fallon has added language to our group services agreements acknowledging our obligations, and those of our contracted employers, with respect to these regulations. Employers will receive the amended group services agreement at their next renewal.

“Small business” health care law

This law (S. 2585) promotes cost containment, transparency and efficiency in the provision of quality health insurance for individuals and small businesses. The law is popularly known as Chapter 288 of the Acts of 2010.

On October 15, 2010, Gov. Patrick signed legislation making “technical corrections” to the original bill, which primarily involved changes to effective dates. Most merged market changes became effective October 1, 2010. Now many provisions of the bill require further guidance from state agencies before implementation can begin.

Below are a few key provisions of the 63-page bill.

  • Limited and tiered networks. One of the most talked about sections of the law is the requirement that insurers offer limited or tiered network plans in the merged market with at least a 12% price differential compared to the base premium for a full-network product. This provision went into effect January 1, 2011.

    Fallon helped to pioneer this approach, introducing Direct Care back in 2002 as an innovative limited network solution for customers looking to save without sacrificing access to high quality health care.

  • On-and-off loophole closed. Consumers can no longer buy nongroup insurance shortly before a pricey medical procedure then drop it afterwards—a practice that drove up the costs for everyone. Now insurers will have an open enrollment period.

  • Changes in rating factors. Changes are made to certain rating factors for merged market business. One change requires insurers to use 1-year bands for age rating, for example, as opposed to the current 5-year bands.

  • Increased DOI oversight of rates. Establishes temporary standards for the presumptive disapproval of merged market rates by the Division of Insurance. These standards will be in place for the next two years.

  • Group Purchasing Cooperatives. Small businesses may group together to purchase health care plans.

  • Wellness programs. Offers technical assistance and subsidies to small businesses that initiate employee wellness programs and purchase these programs through the Connector. Group Purchasing Cooperatives also will be required to offer wellness programs.

  • Contract prohibitions. Bans anti-competitive contract provisions between insurance carriers and health providers that restrict product innovation or tie reimbursement rates to those received by other providers.

  • Data collection. Adds several new requirements for providers and insurers to collect and submit standardized data that state regulators will analyze and review.

  • A mandate on mandates. Requires the Division of Health Care Finance and Policy to do a comprehensive review every four years on the cost and public health impact of existing mandates. [An earlier-proposed moratorium on new mandates was not included.]