The new HIPAA regulations: Do you know the rules?

Even stronger controls have just been set out for HIPAA. They come in the final regulations for the Omnibus Health Insurance Portability and Accountability Act, or the HIPAA rule. The new rules became effective March 26. However, medical offices and business associates have until September 23 to comply.

Mostly, the changes affect patient requests and approvals, breach reporting, and business associates. Along with that, the penalties for noncompliance have gone up. And accompanying the penalty increases is a promise from the government to search out violators with a vengeance.

Three somewhat small changes

First are three relatively small changes that just about all offices will encounter.

•  Patients can now ask for copies of their electronic medical information in electronic format. Also, with both paper and electronic record requests, the office has only 30 days to produce the information. There’s no more 30-day extension for records that are inaccessible or kept off site.
• When patients pay for services personally and in full, they can require that the office not share information about the treatment with their health plans.
• The office can give immunization information to a school if the school is required by law to have it and if the parent or guardian gives written permission.

Guilty till proved otherwise

There’s also a change in how to determine when a breach has to be reported to the government. Until now, offices have followed the harm standard, which said a breach was reportable only if it posed a significant risk of harm to the patient’s finances or reputation.

The new regulations turn that around. They say that any loss or inappropriate disclosure of data is presumed to be a breach unless the office (or hospital or business associate) can show there is a low probability the information will be used improperly.

To determine that, the office has to do a documented risk assessment that covers four elements.

1. The type of information.  Information about sexually transmitted diseases, for example, could harm a patient’s reputation. Credit card numbers and Social Security numbers could be used for identity theft. Risk is high. Yes, there’s been a reportable breach.
2. The recipient of the information. If the office doesn’t know who has accessed the information, assume there has been a breach. However, if the other person is a HIPAA-covered entity, misuse probability is low and so is the risk.
3. Whether the data was actually seen or used. Suppose a stolen computer is recovered and forensic analysis shows the data was never accessed. Risk is low. No breach. Another example: suppose a patient’s record is mailed to the wrong person. If the envelope is returned unopened, risk is low. But if it’s returned opened or not returned at all, risk is high, and the office has to assume there has been a breach.
4. How well the risk has been mitigated.  The mitigating factor might be that the office gets assurance the information won’t be used or disclosed or will be destroyed. That makes the risk low and probably not reportable. However, who that other party is makes a difference. Assurance from a business associate is probably worth relying on; assurance from an unrelated person or company with no obligation to comply with HIPAA is another story.

HIPAA for business associates too

Business associates are now required to comply with HIPAA just as offices are. They have to have safeguards and policies and procedures for keeping data secure. They have to have business associate agreements with their own subcontractors. And they can get hit with penalties if they don’

That’s a logical move, because some of the greatest breaches to date have involved business associates.

The penalties get higher

The penalties for noncompliance have gone up – way up.

The amount depends on the level of negligence. Previously, the limit was $25,000 per violation; now it’s $50,000, with an annual limit of $1.5 million.

And the Office of Civil Rights, which enforces HIPAA, cautions that it’s looking hard for violations and plans to enforce HIPAA “vigorously.”

And three final changes

There are also changes that are of less significance to offices but worth noting all the same.

• There are more restrictions on getting patient authorizations to use personal information for marketing and fundraising. The same also applies to permissions to sell personal information.
• The process for getting patient authorization to use health data for research is now simpler.
• Insurance companies cannot use genetic information for coverage and cost determinations. This does not apply, however, to long-term care plans.

The new HIPAA regulations are found in the January 25 issue of the Federal Register.

By Susan Crawford

AARP's Take on The Affordable Care Act

The Affordable Care Act was signed into law on March 23, 2010, with most of its provisions scheduled to take full effect by Jan. 1, 2014. After numerous legal challenges, the U.S. Supreme Court found, in a 5-4 decision, that the majority of the Affordable Care Act is constitutional.

AARP supported passage of the Affordable Care Act because the law contains numerous protections that benefit our members, their families and other Americans age 50 and over, for whom the lack of health insurance coverage — or affordable coverage — is a serious challenge.

By starting to close the coverage gap known as the "doughnut hole," 5.3 million people with Medicare Part D have saved $3.7 billion since the law was enacted. In the first five months of 2012, 745,000 people with Medicare saved a total of $485.3 million on prescription drugs in the doughnut hole for an average of $651 in savings per person this year. Over 32.5 million Americans in Medicare used one or more free preventive services in 2011. And, over 2.2 million people with traditional Medicare benefited from the new Annual Wellness Visit in 2011.

We are analyzing the entire decision, including the Medicaid portion of the Supreme Court’s decision, to understand what it means for affordable health care coverage moving forward.

Many parts of the Affordable Care Act are already in effect and in use. The Supreme Court decision ensures that the provisions will stay in force. AARP remains focused on helping our members and the public understand the many benefits in the law that are specifically designed to protect older people and their families. These include:

If you have a private or employer-based insurance plan:

• As long as you pay your premiums, an insurance company can no longer drop your coverage if you become sick or disabled;
• An insurance company can no longer place lifetime dollar limits on your health coverage;
• Many private health insurance plans must now cover more preventive care services, such as mammograms and other screenings, at no additional cost to you.
  

If you are uninsured or have a preexisting condition:

• The Affordable Care Act provides a way for many adults with preexisting medical conditions who have been denied coverage to purchase health insurance, and insurance companies can no longer deny coverage to children up to age 19 who have preexisting conditions; 
• The law enables young adults up to age 26 to be covered under a parent's health insurance plan, reducing the number of uninsured young adults and helping ease parental worries. In the past, young people were typically forced off their family's health plan upon turning 18 or 21, or graduating from college;  

• Starting in 2014, insurers may no longer deny coverage to anyone with a preexisting health condition. Also in 2014, new health insurance "exchanges" will provide better insurance access and more options to self-employed people, small businesses and others who have been denied coverage or were unable to find affordable coverage.
  

If you have Medicare:

• Annual wellness visits are provided at no additional cost to you, as are certain preventive care services, such as immunizations and screenings for cancer or diabetes. In 2011, more than 1 million people took advantage of Medicare's new annual wellness visit and more than 32.5 million Americans in traditional Medicare used one or more of the program's free preventive services;
• People with Medicare Part D now receive discounts on prescription drugs while in the doughnut hole. (In 2011, this provision resulted in a savings of $2.1 billion or an average of $604 per person, on prescription drugs for 3.6 million people in Medicare.) The Part D discounts will gradually increase until 2020, when the doughnut hole will disappear;
• The law provides new resources to fight waste, fraud and abuse in the Medicare program and adds about 10 years to the solvency of Medicare.

By AARP

8% of Americans to Qualify for Health Subsidies

About 8% of Americans will qualify for the new federal health-insurance subsidies next year, according to a report released today.

A study by Families USA, a Washington, D.C.-based nonprofit group that advocates for lower health-care costs, found that nearly 26 million Americans will be eligible for federal subsidies that will reduce health-care expenses next year. But it’s not clear how many people will actually use the subsidies to lower costs when the insurance exchanges open in October, since some people will instead qualify for Medicaid if their state expands eligibility. Others, meanwhile, still aren’t aware of how the subsidies and the insurance exchanges will work, and some critics say the application is daunting. “The challenge we have right now is just helping people realize they may be eligible for some serious help,” says Kathleen Stoll, director of health policy at Families USA.

Part of the difficulty will be in helping people understand that the subsidies, which will be offered to those buying health coverage through the state and federally run insurance exchanges created under the Affordable Care Act, will be administered as tax credits that will influence 2014 tax liabilities, says Stoll. The less a person makes, the bigger their credit will be. The more they make, the smaller the credit. But this tax credit comes with a twist: the Internal Revenue Service will make monthly payments directly to the insurance companies, lowering the upfront costs for families. “It’s a funny type of tax credit because it’s based on your income but it’s not going to be given to you,” says Roberton Williams, an economist with the nonpartisan Tax Policy Center, based in Washington, D.C. “It’s basically a transfer of money from the federal government to the insurance company.”

And those families who underestimate what their income will be next year may face an unwelcome surprise: a tax bill. That’s because the subsidies will be issued using estimates of what a person expects to earn in 2014, using the prior year’s income as a proxy. The exact size of the subsidy won’t be calculated until a person files their 2014 tax return, a process that won’t happen until 2015. At that time, if the subsidy due turns out to be bigger or smaller than what they received, the difference will be added or subtracted from their tax refunds — or their tax bills, according to the IRS.

Those people who get a big enough raise that they no longer qualify for the subsidies will have to pay back the money. But some families won’t actually have to pay back the full difference, since repayment amounts will be capped by income and family size. For example, for those making less than two times the poverty level, the maximum amount that needs to be paid back is $300 for a single person or $600 for a family. Those making between two and three times the poverty level won’t have to pay back more than $750 for an individual or $1,500 for a family. And those earning between three and four times the poverty level will face a maximum bill of $1,250 for a single person, and $2,500 for family.

The idea of having to repay the tax credit may be daunting for some families, even with the caps in place, says Stoll. But taxpayers receiving insurance subsidies can soften the blow or avoid such bills completely if they keep the insurance exchanges updated about any changes in income, says Stoll. “You want to report changes as they come up,” she says. The subsidies won’t have to be paid back if income estimates used when signing up are in line with actual income.

Taxpayers can apply for the subsidies, which will cap health-care spending at a certain percentage of income, when they sign up for insurance on the exchanges that are scheduled to open Oct. 1. For a family of four making $32,500, the credit could amount to $11,430, according to Families USA. A family of the same size earning $94,200 would qualify for a smaller subsidy of $3,550.

Families will be able to use the subsidies, which will be based on the cost of the second-lowest-cost silver plan in their area, to buy any plan they want, but the size of the subsidy will stay the same. That means those who buy a less expensive plan will have smaller out-of-pocket costs.

As with other tax credits, taxpayers will have to take a few steps in order to qualify. For example, while people won’t need to have filed tax returns prior to applying for the subsidies; they will have to file returns in order to receive the federal help, according to IRS regulations. There is no way to know how many of the people receiving the subsidies will be filing taxes for the first time, but some experts predict the tax credit will lead to an increase in the number of people filing. Married couples must file jointly if they want to get the subsidy, and the credit will not be issued to people who are claimed as a dependant by someone else.

The credit will be refundable, meaning that if people turn out not to owe any taxes, they can still receive the cash. The IRS says it will be able to enforce collection of overpaid subsidies in the same ways that it collects all other unpaid tax bills, meaning those taxpayers could face liens or levies if they don’t pay back the difference. But families can also set up payment plans, paying by credit card and consider other options if they don’t think they’ll be able to pay back the difference in time.

By Jonnelle Marte

A walk-through on full-time vs. part-time for PPACA

With a substantial portion of the Patient Protection and Affordable Care Act set to go into effect in 2014, employers are working to determine how the law will impact them, their business and their employees. Because the law will require most employers to provide affordable minimum essential health insurance coverage to full-time employees or face financial penalties, employers must understand how the law defines full-time workers, as well as the penalties that businesses can face for failing to comply or choosing not to provide coverage.

Under provisions called the employer shared responsibility rules, the PPACA requires large employers (generally those with 50 or more full-time employees) to provide affordable group health coverage with sufficient value to full-time employees and their dependents. Full-time employees are generally defined as those who work on average at least 30 hours per week. Employers that fail to comply with these rules can face penalties.

What are the potential penalties?

The failure to offer coverage penalty applies if at least one full-time employee obtains subsidized coverage on an exchange where the employer does not offer coverage to at least 95% of its full-time employees and their dependents. This penalty – which can be up to $2,000 per year for each full-time employee (in excess of 30) – will be based on the total number of full-time employees an employer has, regardless of how many employees have government-subsidized exchange coverage.

The insufficient coverage penalty applies if the employer offers full-time employees coverage, but the coverage is either unaffordable (individual premium cost exceeds 9.5% of the employee’s household income) or does not provide minimum value (plan pays less than 60%of the covered costs). Proposed regulations released by the IRS provide guidance and alternative safe harbors for calculating whether health coverage is unaffordable, including use of an employee’s W-2 earnings. The potential penalty for insufficient coverage is $3,000 per year for each employee who obtains government-subsidized coverage on an exchange.

Employers also should note that in determining whether an employer is subject to these provisions (i.e., is a “large employer”), the IRS controlled group rules are applied – meaning that all affiliated employers for which there is 80% or greater common ownership will be treated as a single employer. However, compliance with the employer shared responsibility rules – and any associated penalties – will generally be assessed on an employer-by-employer basis.

Who is considered a full-time employee?

As an employer, the determination of who is a full-time employee will be crucial in evaluating your options for complying with the employer shared responsibility rules, and equally important, designing your group health plan’s eligibility and participation requirements.

Because there can be various ways of assessing what constitutes a full-time employee eligible for coverage under the PPACA, the IRS has issued guidance in the form of several notices, as well as temporary regulations. These guidelines set out criteria and standards that can help employers make accurate determinations when hiring new employees, including:

• Initial measurement period – A designated period of not less than three months or more than 12 months used in determining whether a newly hired variable or seasonal employee is full-time.

• Standard measurement period – An annual designated period of not less than three months or more than 12 months used to determine whether an ongoing variable or seasonal employee is full-time.

• Administrative period – A period of up to 90 days for making full-time determinations and offering/implementing full-time employee coverage.

• Stability period – An annual designated period of not less than six months (and not less than the corresponding measurement period) during which the employer must offer affordable minimum essential health coverage to all full-time employees, or face financial penalties for not doing so.

• Full-time employees – If a new employee is reasonably expected to average at least 30 hours per week at the time of hire, the employee must automatically be treated as full-time and offered group health coverage within three months of hire.

• Variable hour and seasonal employees – A variable hour employee is someone whom the employer cannot reasonably determine will average at least 30 hours per week at the time of hire. No definition is provided for a seasonal employee, but presumably it would include anyone who works on a seasonal basis. Employers may use the initial measurement period to determine whether a newly hired variable or seasonal employee actually averages at least 30 hours per week, and the standard measurement period to determine whether an ongoing variable or seasonable employee actually averages at least 30 hours per week. If the employee does average at least 30 hours per week during the initial measurement period or standard measurement period, the employer must offer affordable minimum essential health coverage during the stability period, or face financial penalties for not doing so.

• Transition from new to ongoing employee status – Once a new employee has completed an initial measurement period and has been employed for a full standard measurement period, the employee must be tested for full-time status under the ongoing employee rules for that standard measurement period, regardless of whether the employee was full-time during the initial measurement period.

by By L. Scott Austin and David Mustone

Obama Trims Details on Health Law as Exchange Cost Rises

The $1.3 trillion U.S. health-care system overhaul is getting more expensive and will initially accomplish less than intended.

Costs for a network of health-insurance exchanges, a core part of the Affordable Care Act, have swelled to $4.4 billion for fiscal 2012 and 2013 combined, and will reach $5.7 billion in 2014, according to the budget President Barack Obama yesterday sent to Congress. That spending would be more than double initial projections, even though less than half the 50 U.S. states are participating.

The unanticipated spending is a consequence of an ambitious timetable dictated by Congress and a complex new way of offering people medical coverage, say analysts, lobbyists and administration officials. Combine that with a majority of Republican governors declining to cooperate with a Democratic president and U.S. regulators are left grasping to get the 2010 health law up and running by a Jan. 1, 2014, deadline.

“Once you’re behind schedule, the way you solve problems is you write checks,” said Douglas J. Holtz-Eakin, a former Congressional Budget Office director who is now president of the American Action Forum, which has opposed the health law.

The law already has made positive changes to the health system, said Robert Blendon, a professor of health policy at the Harvard School of Public Health in Boston. He cited the law’s guarantee of insurance coverage for people younger than age 26 who stay on their parents’ plans, and caps on the premium revenue insurers can keep for profit and administrative costs.

Touching Lives

“There’s no dispute that those things that directly touched people’s lives actually occurred,” Blendon said today in a telephone interview. “The negative issues are all about the potential threats of rising health-care costs, rising deficits that people have completely different views about.”

The Obama administration is opting to delay some aspects of the law. It temporarily backed away from restrictions on coverage for executives and a promise to offer small businesses greater choices of health plans.

The basic requirements of the health law must function by Jan. 1, even if all the bells and whistles aren’t complete, said Ron Pollack, executive director of Families USA, a consumer advocacy group that backs the overhaul.

Long-Term Strategy

“The Affordable Care Act is not a short term, temporary fix of America’s health-care system,” he said in an interview. “It’ll have long-term benefits, and so the administration clearly is making sure the most essential elements of the new law are effectively in place on a timely basis.”

Obama administration officials say the bulk of the health law will be up and running on time.

“There’s an awful lot to implement and we want to do it efficiently,” Ellen Murray, the assistant secretary for financial resources at the Health and Human Services Department, said in an interview. “It’s a big job, and we want to do it right.”

The government has warned that the exchanges, which are supposed to open in every state on Oct. 1, may not be easy for low-income people to navigate. In many states, people found to be eligible for Medicaid, the state-run program for the poor, will have to sign up through their state government instead of through the exchange.

Beyond Imagination

“It’s a lot more complicated than anybody imagined,” Joseph Antos, a health economist at the nonprofit American Enterprise Institute who advises the CBO, said by phone.

That’s because the federal government has been forced to build part or all of the exchanges in 34 states where governors or legislatures declined to do it themselves. The government expects to spend $1.5 billion this year on the federal exchange, Murray said.

In those states, connections between computer systems that run the federal exchange and state Medicaid programs are incomplete, said Caroline Pearson, a vice president at Avalere Health, a consulting firm based in Washington that is tracking exchange development.

The extra step required to sign up might discourage enrollment by low-income people, she said in an interview.

“You sort of always want to minimize the number of interactions you have to have in order to get people into the system,” Pearson said. These are “additional hurdles that could present a problem,” she said.

People Covered

The result is that the number of Americans projected to gain insurance from the law has already eroded, by at least 5 million people, to 27 million by 2017, the CBO said in February. In addition, as many as 8 million people will lose health-care plans now offered through their employers, almost three times more than the CBO initially projected.

The bulk of the Affordable Care Act relies on governors to build exchanges and expand Medicaid, the joint federal-state program for the poor. The law also required a myriad of regulations to be crafted and vetted by hospitals, insurers and other industry groups, all to be done within four years.

By comparison, President George W. Bush’s administration in 2003 was given three years by Congress to implement a new drug benefit in Medicare, a program whose scale is dwarfed by the health overhaul.

No Favors

“Congress did the administration absolutely no favors in setting the timetable,” said Neil Trautwein, vice president and employee benefits policy counsel at the National Retail Federation, a Washington-based lobbying group for retailers. “Because of a host of complications, the administration is behind in trying to catch up.”

For Obama that means delays. He’s pushing back a prohibition against companies giving their top executives better health plans than lower-ranking employees, and a requirement that they automatically enroll workers into the plans. Small businesses that had hoped to give their workers a choice of health plans in government-run marketplaces will instead have to choose one plan for their entire workforce.

A new program for states, called the Basic Health Program, won’t start until 2015, angering Obama’s allies. The Basic Health Plan was intended to be an option for states that want to cover more low-income people with a government health program, instead of private coverage sold through the exchanges. The provision was added to the law by Senator Maria Cantwell, a Washington Democrat, whose state operates a similar program and sought federal money to expand it.

Doing Triage

After the delay was announced in February, Cantwell threatened to oppose confirmation of an administrator for the U.S. Centers for Medicare and Medicaid Services, which is setting up exchanges. The senator questioned administration officials about the delay at three hearings, and won a letter on March 28 from Health and Human Services Secretary Kathleen Sebelius, promising to begin the program by 2015 and laying out a detailed timeline to set it up.

“It looks like what they’re doing is triage,” Holtz-Eakin said of the government. “If this isn’t going to work, forget it. If that’s not on time, forget it. Let’s get to the things that we can make work, and declare victory.”

By Alex Wayne

Will reform really drive up young-adult premiums?

Insurers have been saying the age-rating provision in the health care reform law will raise premiums for young adults, but a new report suggests that assumption is overblown.

The health insurance pricing report, out this week from HealthPocket, a website that compares and ranks health plans, found that premiums are already largely in line with the Patient Protection and Affordable Care Act’s age-based restrictions on pricing.

Under the health reform law, insurers are limited to the amount they can charge older people for their insurance to a maximum of three times the amount younger people pay.

HealthPocket analyzed more than 20,000 premium quotes for 3,629 health insurance plans available within the two largest metropolitan regions in each state. It examined price increases in existing policies for males and females ages 23, 30 and 63. Health plans were limited to the individual and family insurance market for consumers under 65.

The study found that average premiums across the nation are 260 percent higher for 63-year-olds vs. 23-year-olds under current plans, under the 300 percent cap allowed under the PPACA. 

“The biggest unknown right now for health care consumers is how health reform will affect what they pay for health coverage starting in 2014,” said HealthPocket CEO Bruce Telkamp. “It is encouraging to know that age-rating requirements in the health law will not be a major driver of increases to premiums.”

The age-rating provision has been one of many hotly contested arguments over reform's consequences on premiums.

In January, actuaries at consulting firm Oliver Wyman warned that the law’s age-rating provision could mean a 42 percent hike in premium costs for people aged 21 to 29 when they buy individual coverage.

Supporters of the law say the age-rating restrictions are necessary to ensure seniors are fairly charged for coverage, but others argue the requirement will raise costs for young adults and lead them to forgo health insurance, which will negatively impact the entire market.

“If younger, healthier people choose to forgo purchasing insurance until they get sick or injured, costs will increase for everyone — young and old,” America’s Health Insurance Plans President and CEO Karen Ignagni has said. 

But HealthPocket researchers said that assumption is unfounded. They did, however, warn that men may prepare to have to pay up as a result of reform.

Currently, men enjoy lower average premiums than women. For example, the average premium for a 23-year-old man was nearly 20 percent less expensive than the average premium for a 23-year-old woman, HealthPocket data found. But PPACA will eliminate gender distinctions, so a same-age male and female nonsmoker in the same city will pay the same rate.

“Unlike the age-rating limit, the elimination of gender-based pricing will drive premium changes. Certain segments such as younger women will benefit from the prohibition while younger man may pay more as a result,” Telkamp said.

BY KATHRYN MAYER

HHS toughens HIPAA violation penalties

The U.S. Department of Health and Human Services is implementing tougher penalties for violations of the Health Insurance Portability and Accountability Act. 

Before the passage of the Health Information Technology for Economic and Clinical Health Act, civil monetary penalties could total $100 per violation and a maximum aggregate penalty of $25,000 per year for each violation. Typically, civil penalties were only applied in egregious cases; however, as part of the HITECH Act, the final rule increases fines for civil penalties and now includes a tiered penalty structure in line with the nature and circumstances of the violation.

As part of the final rule, the maximum penalty for a HIPAA violation comes to $1.5 million while the assessed penalty relates to the level of culpability characterizing the violation. This includes:

• When the covered entity or business associate is unaware of the violation and would not have known of the violation by exercising reasonable due diligence, a civil penalty of $100 to $50,000 per violation could be distributed.
• If reasonable cause leads to a violation, the civil penalty could come to $1,000 to $50,000 for each violation.
• Following a violation of willful neglect that has been corrected within 30 days of discovery, a civil penalty could total $10,000 to $50,000 per violation.
• For a violation of willful neglect that was not correctly addressed within the required time frame, the civil penalty could be $50,000 to $1.5 million per violation.

If multiple HIPAA violations occur, penalties could surpass $1.5 million.

The final rule also gives affirmative defense for all tier-one violations, defined as unknowable violations, as well as tier-two violations, which are of reasonable cause, when corrected within 30 days of the date after the violation becomes known.  Depending upon the nature and extent of the covered entity or business associate’s failure to comply, some discretion is allowed to span past the 30-day time frame.

Under the final rule, HHS also does not have to try to informally settle complaints. HHS now can determine whether it will attempt to do so or begin the formal penalty assessment process immediately. HHS can share information found during all investigations and compliance reviews with other law enforcement agencies.

For HIPAA violations by self-funded group health plans, the final rule allows civil penalties to be applied against a covered entity by a business associate acting as its agent. When evaluating the existence of an agency relationship, HHS can practice federal common law principles over a covered entity’s right or authority to control a business associate when deciding whether the business associate is acting as an agent.  

Understanding exchanges still a struggle for consumers

Yet another poll is out underscoring one of the main concerns over health reform — that consumers just don’t get it.  

According to this survey, released Thursday by InsuranceQuotes.com, 90 percent of Americans don’t know when the new health insurance exchanges will open.

A major component of the Patient Protection and Affordable Care Act, the new health insurance exchanges will be available for online and telephone enrollments beginning Oct. 1. Coverage begins on Jan. 1, 2014. Exchanges are intended to give families and small-business owners accurate information to make apples-to-apples comparisons of private insurance plans and get financial help to make coverage more affordable if they’re eligible.

The exchanges are a core component of the individual mandate that will require all Americans to obtain health insurance or pay a fine. As a result, tens of millions of previously uninsured Americans are expected to gain access to health insurance.

The survey of roughly 1,000 U.S. adults found that 40 percent expect health reform to have a major effect on their lives, while 39 percent think the law will have a minor effect and 19 percent expect no effect.

The survey found that Americans were more knowledgeable about other aspects of health reform. For instance, 73 percent correctly answered that health plans cannot deny coverage based on preexisting health conditions. And 66 percent accurately said that health plans must extend coverage to dependent children up to age 26. Those two provisions have been among the most popular.

Still, insurance experts say having only some knowledge isn’t enough.

 “A lot of people need to study up on health care reform and what it means to them,” said Laura Adams, senior insurance analyst at InsuranceQuotes.com. “We found a very inconsistent understanding of the Affordable Care Act, and we fear that many people will miss key deadlines and benefits because they don’t adequately understand the new law.”

Uninformed consumers who are unaware of what the exchanges do and what health reform means for them has been a huge hurdle of PPACA. It’s something that government officials are working to alleviate. In January, The Department of Health and Human Services relaunched healthcare.gov, a website aimed at informing consumers about the health reform law while giving them a place to purchase insurance.

In total, 39 percent of Americans said they are somewhat knowledgeable about PPACA, 28 percent said they aren’t too knowledgeable, 21 percent said they aren’t at all knowledgeable and only 10 percent said they are very knowledgeable.

The survey was conducted March 7-10 by telephone by Princeton Survey Research Associates International.

BY KATHRYN MAYER

Healthcare law could raise premiums 30% for some Californians

About 5 million Californians got a first glimpse at what they might pay next year under the federal healthcare law. For many, that coverage will come with a hefty price tag.

Compared with what individual policies cost now, premiums are expected to rise an average of 30% for many middle-income residents who don't get their insurance through their employers.

Alternatively, lower-income consumers will reap the biggest savings and are projected to save as much as 84% off their coverage thanks to federal subsidies.

The figures were released Thursday by Covered California, the state agency charged with implementing the federalAffordable Care Act. They underscore the harsh reality that costs for some consumers will have to rise in order to carry out the biggest healthcare expansion in half a century.

"It's hard to design any change of this scale where everybody is a winner and no one is worse off," said Gerald Kominski, director of the UCLA Center for Health Policy Research and an expert on health insurance. "Some people will feel they are being unfairly targeted or penalized."

The threat of higher costs could alienate many of the policyholders the state needs to keep in the fold in order to offset the increased costs of covering sicker, poorer people who have been shut out of the system for years.

According to the state, about 1.3 million people who are middle-income or higher and already have coverage not through an employer will bear the brunt of the higher costs. These are individuals making more than $46,000 and families earning more than $94,000 annually. People below those income levels qualify for federal subsidies.

An estimated 3.6 million Californians who are either uninsured or low-income will benefit the most from these changes. They will gain from guaranteed access to health insurance for the first time, regardless of their medical history. And they will no longer face financial ruin from enormous medical bills.

The actual premiums people will pay aren't known yet. Next week, health insurers will submit their proposed rates to the state for coverage starting Jan. 1. Covered California plans to select certain companies for the state-run insurance exchange and negotiate rates by mid-May.

California consumers weary from years of double-digit rate hikes in the current market said they would welcome some relief.

Erin McCoy, a single mother with two sons, said her family's Anthem Blue Cross premiums have shot up 28% in the last year to $820 a month. Next year, the Hermosa Beach resident may qualify for premium subsidies that could lower her costs substantially.

"I'm hoping Obamacare will help me," said McCoy, 48, a self-employed advertising executive.

Chris Peterson of Santa Clarita fears she could end up paying more under the revamped insurance system. A 58-year-old widow, she pays about $1,100 a month for an HMO plan to cover her and her 22-year-old son. She said she doesn't expect to qualify for federal assistance and worries about government taking a bigger role in healthcare.

"I have a feeling things will get worse," she said. "The benefits I have right now aren't so bad."

Insurance industry officials said they support the state's efforts to expand and improve health coverage. But they warn that somebody has to pay more.

"These richer benefits, more predictable coverage and subsidies come at a cost," said Patrick Johnston, president of the California Assn. of Health Plans. "All these expansions add to the already increasing cost of care."

Age is another dividing line. Younger people will generally see higher premiums under the federal overhaul, while older consumers could reap some of the biggest savings. Still, the state said, many younger consumers will qualify for subsidies because they earn less, helping to mitigate higher rates.

State officials are eager to quell mounting worries over potential rate shock. Even supporters of the federal law have expressed concern that the new government requirements will drive up premiums too high.

"It is critical for us to understand the true financial impact on Californians as we move toward 2014, and this is an important step in determining strategies to help protect consumers from cost increases," said Peter Lee, executive director of Covered California. "There may be increases in premiums depending on what product people buy."

Starting next year, income will drive what most consumers ultimately end up paying for their coverage in the individual market.

By Chad Terhune

Small-Business Insurance Market From Health Law Delayed a Year

Small-business employees will have to wait a year before they can choose their own medical plans after the Obama administration delayed a part of the 2010 U.S. health-care law intended to provide them with coverage options.

Starting in 2014, workers at companies with fewer than 100 employees were supposed to have been able to choose from a variety of health plans through new small-business insurance marketplaces. They’ll instead wait until at least 2015, according to regulations released by theU.S. Department of Health and Human Services.

In the meantime, small-business employees will face a situation similar to what most companies offer, with their employers choosing the coverage. Health insurers will still offer the plans, though they’ll be competing for business from companies, not individuals.

The delay is “a major letdown for small-business owners and their employees looking forward to robust, competitive exchanges in 2014,” said John Arensmeyer, chief executive officer of the Small Business Majority, an advocacy group that backed the health-care law, in a statement.

Implementation of employee choice in the program won’t be possible next year because of “operational challenges,” the U.S. said in the regulation posted March 11. The government, in its regulatory statement, said it had heard from insurers and others who were worried that health plans, brokers and companies wouldn’t be able to adjust to the new marketplace, called the Small Business Health Options Program, or SHOP, in time.

‘Transitional Policy’

“This transitional policy is intended to provide additional time to prepare for an employee choice model and to increase the stability of the small group market while providing small groups with the benefits of SHOP in 2014,” the Obama administration said in an explanation of the ruling.

The delay applies only to 33 health exchanges run by the federal government. Sixteen states and the District of Columbia are building their own.

The postponement offered another opportunity for critics of the law.

“If one of the key goals of supporters of the health care law was to provide small business owners with a competitive process by which they could select from a number of affordable health insurance plans for their employees, then that goal is not in sight,” Representative Sam Graves, a Missouri Republican, wrote in a March 27 letter to Marilyn Tavenner, who heads the Centers for Medicare and Medicaid Services.

Graves heads the House of Representatives’ Small Business Committee. Tavenner’s agency is responsible for implementing parts of the law.

By Drew Armstrong

THE ABCs of ACA for Small Business Owners

According to recent surveys a high percentage of small business owners do not understand the Affordable Care Act (ACA) health insurance mandate.

 

The following is clarification of the ACA mandate for the small business owner:

1. Small groups are NOT mandated to offer or provide coverage.
2. Large groups ARE MANDATED to OFFER coverage to full time employees and dependents (defined as children not spouses) or be subject to a penalty. (often referred to as “Play or Pay”)
3. Individuals must have coverage (the “individual mandate”), unless they are covered through their employer or some other source.  If they do not have coverage, the penalty (to the individual) in 2014 is $95 or 1% of income for each individual.  It will increase in years following. 

Q. What is a Large Group for determining if they must offer coverage?

A.   A Large Group is a company that has 50 or more Full Time Equivalent employees.  Full Time Equivalent means a combination of full time employees (average 30 hours/week) and part time employees. Thus, for example, a group with 30 full time employees and 40 half time employees would equal 50 Full Time Equivalent Employees and would be required to offer coverage.

Q. Must a Large Group employer cover or provide coverage for all employees & dependents?

A. No. The Large Group employer must offer minimum value, affordable coverage to all Full Time employees and their dependents (defined as children not spouses). Offer means that the full time employees are given an opportunity to enroll. Minimum value coverage means that the plan covers at least 60% of medical expenses. Affordable means that the cost of employee only coverage cannot exceed 9.5% of that employee’s W-2 wages. 

Please contact us for more information about Employer Shared Responsibility/Play or Pay.

Surveys also reveal that a majority of small business owners are not able to define the meaning of an Exchange.

(In California the Exchange is called “Covered California”.) 

Q. What is an Exchange?

A. In general, an Exchange is a market place where individuals or small groups can buy health insurance.   Amazon.com and Priceline.com are examples of online exchanges.  The Exchange is an alternative to the traditional private marketplace.  There are two types of Exchanges under Covered California.  The Individual Exchange and the SHOP (Small Group Health Options) Exchange.

Q. Who will sell insurance within the Exchange?

A. Although not yet finalized, some of the insurance carriers, but not all, who sell insurance currently in the private market, will also offer health insurance through Covered California.  Brokers like DBS will be able to present these options as well naturally, so that we can confirm which options are best for your company (inside or outside the exchange).

Q. Will there be savings for small employers in the SHOP Exchange?

A. Rate information is not yet available.  The SHOP Exchange officially opens for enrollments October 1, 2013.

Q. Are small groups required to purchase their insurance through the exchange?

A. No. Small Groups and individuals are not required to go through the Exchange for coverage. They have the right to continue obtaining insurance in the private market as they have prior to the reform law.

Q. Will there be savings for individuals who purchase health insurance through the Exchange?

A.  For those whose income is up to 400% of the Federal Poverty Level (FPL), financial assistance (tax subsidies) may be available when health insurance is purchased through the Exchange.  But the paperwork and burden of proof is going to be significant.  The closer one is to 400% of the FPL, the less the subsidy will be.  (FYI: 400% of the FPL = approximately $45,000 for an individual, and $92,000 for a family of four).