On August 17, 2011, the Departments of Labor, Health and Human Services (HHS), and Treasury released proposed regulations regarding the Patient Protection and Affordable Care Act (PPACA) requirement to distribute a uniform explanation of coverage.  The new rules are intended to provide individuals with more useful information to enable them to better understand their options when making coverage and enrollment decisions.

Two New Forms

Under the new rules, health plans will be required to provide their participants with two new forms: (1) an easy-to-understand “Summary of Benefits Coverage” (SBC) and (2) a standard glossary of commonly-used health care plan terminology.  The new rules also require health insurers to provide these forms to their customers.

A notable requirement of the new SBC is that it must include “coverage examples” that describe coverage and cost sharing for certain common health care scenarios.  Currently, the three scenarios required on the SBC are having a baby, treating breast cancer, and managing diabetes.

A template of the SBC can be found on the Department of Labor website.  The four-page uniform glossary of terms that must be provided to all participants can also be found on the Department of Labor website.

Effective Date and Compliance

The new rules will take effect on March 23, 2012, and they will apply to all group health plans, both grandfathered and non-grandfathered.  Health plans must provide these new forms to participants as part of any package of materials that is sent to them prior to their first enrollment in coverage, and 30 days prior to their re-enrollment or renewal of coverage.  They must also provide the new forms upon request, within seven days.

If there is a material modification in any of the terms of the plan that would affect the content of the SBC, the plan must provide notice of the modification to enrollees not later than 60 days prior to the date on which such modification will become effective.

Plans may be imposed a fine of up to $1,000 for each instance of willful non-compliance. In calculating the amount of the penalty, each failure with respect to an individual participant or beneficiary is considered a separate offense.

Public Comment and Where to Get More Information

The proposed regulations are open to public comment through October 21, 2011.  For more information on making comments, refer to the proposed regulations.

A news release regarding the proposed regulations and other information (both regarding the proposed regulations and other aspects of PPACA) can be found on the Department of Labor website.  A fact sheet of the new requirements can be found at HealthCare.gov.

The Centers for Medicare & Medicaid Services (CMS) have announced new a Cost Threshold and Cost Limit under the Early Retiree Reinsurance Program (ERRP).  The new Cost Threshold will be $16,000, up from the current level of $15,000.  The new Cost Limit will be $93,000, up from $90,000.  The new Threshold and Limit are effective for plan years beginning on or after October 1, 2011.

The CMS also recently issued new guidance for plans on how to comply with the maintenance of contribution requirement under the ERRP. The guidance provides flexibility in satisfying the requirement, while also helping to ensure that a plan does not violate the prohibition against using ERRP reimbursement as general revenue. To the extent a plan is unable to use the maintenance of contribution approaches described in the new guidance, the plan may demonstrate compliance in other ways, provided that upon audit the plan can demonstrate how its approach is consistent with the ERRP statutory and regulatory requirements.

The guidance identifies the plan years for which a plan must comply with the maintenance of contribution requirement, the costs that are to be used to determine the level of contribution toward the plan, the baseline period that may be used to determine the required contribution level, and various methodologies a plan may utilize to measure the maintenance of contribution. Examples are also provided in the guidance.

Plans participating in ERRP should evaluate their maintenance of contribution approaches in light of this new guidance.

This is a summary of the guidance.  A more detailed explanation can be found on the Towers Watson website.

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Horizon Actuarial Services, LLC is an independent company and is not affiliated with Towers Watson.

On August 1, 2011, the Department of Health and Human Services (HHS) amended an interim final regulation on the Patient Protection and Affordable Care Act (PPACA) to expand the list of preventative women’s services. The new services were added based on recommendations by the independent Institute of Medicine (IOM), which was commissioned determine what preventive services are necessary for women’s health and well-being.

The new services must be covered without cost-sharing by non-grandfathered health plans, regardless of whether they are insured or self-insured.

The following eight (8) categories of women’s services are now included on the list of mandatory preventive services:

1. well-woman visits
2. gestational diabetes screening
3. HPV DNA testing
4. sexually-transmitted infection counseling
5. HIV screening and counseling
6. FDA-approved contraception methods and contraceptive counseling
7. breastfeeding support, supplies and counseling
8. domestic violence screening and counseling

Non-grandfathered group health plans will need to provide these additional preventive services for plan years beginning on or after August 1, 2012. For calendar year plans, this means compliance is required beginning January 1, 2013.

There will be a cost impact for plans that do not currently cover these services and for plans that currently impose cost sharing on these services or supplies (e.g., contraceptives). In addition, plan documents and SPDs will need to be amended to reflect coverage of these new preventive items and services.

Public comments on this amendment to the preventive service interim final regulation are due October 3, 2011.

This is a summary of the guidance.  A more detailed explanation can be found on the Towers Watson website.

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Horizon Actuarial Services, LLC is an independent company and is not affiliated with Towers Watson.

The Department of Health and Human Services (HHS) announced that it will stop accepting applications after September 22, 2011 waivers from the Patient Protection and Affordable Care Act (PPACA) requirements that plans must offer a certain minimum dollar coverage amount for essential benefits each year.  This applies to from sponsors of “limited benefit” health care or “mini med” plans.  Plan sponsors who have already received waivers – including those whose waivers have not yet expired – have until September 22, 2011 to seek an extension.

The waivers under the extension will now last through the end of 2013 if plan sponsors comply with certain requirements such as submitting information about their plans and ensuring that participants understand the limits of the coverage.  Prior to this guidance, waivers lasted only one year.  No annual dollar limits on essential health benefits are permitted beginning in January 1, 2014.

The application materials are available online at: CCIIO: The Center for Consumer Information & Insurance Oversight.

This is a summary of the guidance.  A more detailed explanation can be found on the Towers Watson website.

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Horizon Actuarial Services, LLC is an independent company and is not affiliated with Towers Watson.

Sponsors of group health plans are required to notify annually individuals who are eligible for Medicare Part D as to whether the drug coverage they have is creditable or non-creditable.

The Centers for Medicare and Medicaid Services (CMS) have made two changes to this requirement:

1. CMS has issued new model disclosure notices that are to be used after April 1, 2011. The model notices, in both English and Spanish, can be found on the CMS website.

2. Beginning in 2011, the Patient Protection and Affordable Care Act (PPACA) changed the Medicare enrollment period, so the disclosure notice must now be sent to participants a month earlier. In the past, the Medicare enrollment period was November 15 through December 31, and the notice had to be given out by November 15.  PPACA changes the enrollment period to October 15 through December 7.  Accordingly, creditable coverage notices must now be sent by October 15.

The IRS has issued Notice 2011-28 with guidance for employers on Form W-2 reporting of the cost of their employer-sponsored group health plan coverage for employees as required under the Patient Protection and Affordable Care Act (PPACA).

Compliance is required beginning with the Form W-2 that will cover the 2012 year (delivered to employees in January 2013). Reporting for years prior to 2012 is optional. Several transition rules provide temporary reporting relief with respect to some types of health coverage (e.g., HRAs), for small employers (file fewer than 250 W-2s), and for multiemployer plans.

The guidance covers:

* Transition relief
* Employers subject to reporting
* Methods of reporting
* Aggregate cost of applicable employer-sponsored coverage
* Cost of coverage required to be included in the aggregate reportable cost
* Methods of calculating the cost of coverage
* Other issues relating to calculating the cost of coverage

This is a summary of the guidance.  A more detailed explanation can be accessed on the Towers Watson website.

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Horizon Actuarial Services, LLC is an independent company and is not affiliated with Towers Watson.

Effective May 6, 2011, the Department of Health and Human Services (HHS) will no longer accept new applications for participation in the Early Retiree Reinsurance Program (ERRP) due to the availability of funding.  If a plan sponsor who have yet to decide whether to participate in the ERRP will need to make a decision and file the appropriate application by May 5, 2011.

This application deadline has no affect on currently approved applications.

http://www.errp.gov/newspages/20110401-applications-acceptance.shtml