June 2010 Regulation Update

Patient bill of rights

A few days ago, the Departments of Health and Human Services, Labor, and Treasury issued regulations to implement a new Patient’s Bill of Rights under the Affordable Care Act – which will help children (and eventually all Americans) with pre-existing conditions gain coverage and keep it, protect all Americans’ choice of doctors and end lifetime limits on the care consumers may receive. These new protections apply to nearly all health insurance plans.

How These New Rules Will Help Your Employees

Stop insurance companies from limiting care. For most plans starting on or after September 23, these rules stop insurance companies from imposing pre-existing condition exclusions on children; prohibit insurers from rescinding or taking away coverage based on an unintentional mistake on an application; ban insurers from setting lifetime limits; and restrict their use of annual limits on coverage.

Remove insurance company barriers between the patient and doctor. For plans starting on or after September 23, these rules ensure that plan participants can choose the primary care doctor or pediatrician they want from your plan’s provider network, and that they can see an OB-GYN without needing a referral. Insurance companies will not be able to require prior approval before seeking emergency care at a hospital outside of the plan’s network. Please note: These protections only apply to health plans that are not grandfathered.

Keep Young Adults Covered. Starting September 23, children under 26 will be allowed to stay on their parent’s family policy, or be added to it. Group health plans that are grandfathered plans can limit this option to adult children that don’t have another offer of employment-based coverage. Many insurance companies and employers have agreed to implement this program early, to avoid a gap in coverage for new college graduates and other young adults. However, this increases the total cost of providing benefits to you as the employer, and should be taken into consideration when making this decision.

Also Beginning September 23, 2010...

No Pre-Existing Condition Exclusions for Children Under Age 19. The new regulations will prohibit plans from denying coverage to children based on a pre-existing conditions. This ban includes both benefit limitations and outright coverage denials. These protections will apply to all types of insurance except for individual policies that are “grandfathered,” and will be extended to Americans of all ages starting in 2014.

No Arbitrary Rescissions of Insurance Coverage. Right now, insurance companies are able to retroactively cancel a policy when the participant becomes sick, if an unintentional mistake is made on the employee’s paperwork.

No Lifetime Limits on Coverage. The regulation prohibits the use of lifetime limits in all health plans and insurance policies issued or renewed on or after September 23, 2010.

Restricted Annual Dollar Limits on Coverage. Annual dollar limits are less common than lifetime limits, involving 8% of large employer plans, 14% of small employer plans, and 19% of individual market plans. The rules will phase out the use of annual dollar limits over the next three years until 2014 when the Affordable Care Act bans them for most plans. Your plan likely already complies with this statute for 2011, but it is important to ensure it stays compliant as the increases begin in subsequent years. 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. For plans issued or renewed beginning January 1, 2014, all annual dollar limits on coverage of essential health benefits will be prohibited.

The new ban on lifetime limits would affect group premiums by 0.5%. And, the prohibition of preexisting conditions exclusions for children would affect group health plans by a few hundredths of a percent.

As always, Valley Forge Benefits Consulting will assist our clients with compliance of all applicable regulations, as well as strategizing on how best to position your benefit programs going forward based on these new rules. If you have any questions currently, please do not hesitiate to contact your client liason at Valley Forge Benefits Consulting.