10 Things to Know About Health Insurance Exchanges

Your health insurance options are about to change.

Starting Oct. 1, Americans will be able to shop for coverage through national and state-administered insurance exchanges. But you only have six months to make your move.

Here are 10 things you need to know before open enrollment begins.

HEALTH INSURANCE EXCHANGE QUESTIONS ANSWERED

1. What happens on Oct. 1?

Starting Oct. 1, you can purchase health coverage through the Affordable Care Act health insurance exchange program. The coverage kicks in Jan. 1, 2014.

Your coverage options depend on where you live. Some states have exchanges run by the federal government, whereas others have their own exchanges or ones created in conjunction with the Obama administration. Either way, you can go to HealthCare.gov to see your coverage options and how much they cost.

You have six months to make a choice. If by March 31 you have no health insurance through the exchanges or your employer, you face a fine of 1 percent of your yearly income or $95 per person -- whichever is higher. The fee increases every year, rising to 2.5 percent of your yearly income in 2016 or $695 per person. That's on top of any health care costs.

2. What if I have health insurance through my employer?


If you have health insurance through your employer, you can keep it.

Job-based plans qualify as "minimum essential coverage." In other words, you won't be fined for not having health insurance if you're covered through your job. And because your employer pays a proportion of your premium, the coverage might be cheaper than the plans offered through the insurance exchange program.

You might still want to explore your options, but beware: Depending on the job-based coverage available to you, you might not qualify for certain savings offered through the health insurance exchange program. Check HealthCare.gov to find out.

3. What are the different types of health insurance?


All of the available health insurance plans will offer "essential health benefits" for emergency services, maternity, neonatal and pediatric care, outpatient and rehabilitation services, counseling and therapy, preventive and wellness services and prescription drugs.

Certain plans may offer additional coverage. You'll be able to compare plans in terms of coverage and cost starting Oct. 1 on HealthCare.gov.

4. What is a "catastrophic" plan?


A catastrophic plan offers essential health benefits but has a higher deductible. Think of it as a safety net in case you have an unexpected accident or illness; you'll pay less up front but more if you need it. The plan does, however, cover three annual primary care visits and preventive services at no cost.

To qualify for a catastrophic plan, you must be under 30 years old or get a "hardship exemption" because you're unable to afford health coverage.

5. Can I get dental coverage?


Dental care is considered an essential health benefit for children, but not for adults.

Adults can choose a plan that includes dental coverage, or opt into a separate dental plan and pay an additional premium.

6. How much will health insurance cost?


Different plans have different costs depending on the coverage, but all of them must be approved by state insurance departments.

The pricing information will be posted Oct. 1 at HealthCare.gov, where you can compare coverage options and their costs. You might qualify for cost savings based on your income.

7. Will be my kids be covered?


Children can be covered by their parents' health insurance plan until they turn 26. If a dependent turns 26 during 2014, he or she can enroll in a new health insurance plan even after open enrollment closes March 31.

People under 30 can qualify for catastrophic coverage with a lower premium but a higher deductible.

8. What if I have a pre-existing condition?


Starting in 2014, you can't be denied health insurance or charged more because you have a pre-existing health condition, even if you've been refused coverage in the past.

The only exception is for grandfathered individual health insurance plans, according to HealthCare.gov. But you can purchase a new plan through the health insurance exchange program Oct. 1 and get coverage for your pre-existing conditions.

9. What if I'm unemployed?


Your coverage options depend on your household income, not your employment status.

Depending on your income, you might qualify for Medicaid or the Children's Health Insurance Program. You might also qualify for lower monthly premiums and out-of-pocket costs through the health insurance exchange program. Check HealthCare.gov on Oct. 1 to find out.

10. What if I miss the March 31 deadline?


You have six months to choose the health insurance plan that's best for you and your family. If you miss the March 31 deadline, you could face a fine of 1 percent of your yearly income or $95 per person, whichever is higher.

But some life events, like the loss of a job, birth or a divorce, qualify you for a special enrollment period outside the October-to-March window. A 26-year-old dependent that loses his or her coverage through a parent's plan can also enroll throughout the year.

by Katie Moisse

California Online Health Exchange Said Ready for Oct. 1

California, the most populous U.S. state, said the health insurance exchange it’s building as part of the Affordable Care Act will be ready on Oct. 1.

Delayed testing of computers and other missed milestones have raised questions about whether exchanges nationwide would be ready to start enrolling as many as 7 million customers next month for subsidized private medical plans that are the centerpiece of the 2010 health law. California, the first U.S. state to pass a law to set up an exchange, wasn’t immune.

“To be ready and functional to launch is in itself a miracle,” Diana Dooley, the chairwoman of the California Health Benefit Exchange, said today at a board meeting in Sacramento.

Officials of the exchange, known as Covered California, said last month they were still testing the website’s technology and there was a chance consumers may not be able to buy plans on their own immediately and would instead have to go through licensed brokers or use the telephone hotline. After testing the site, exchange officials today said it’s ready.

“The puzzle pieces are coming together, and some of the final pieces are being put in place,” Anthony Wright, executive director of Health Access California, a consumer advocacy group, said in a statement.

Popularly called Obamacare, the health law sets up a system of state-based online and telephone exchanges that will sell insurance from private providers to people who don’t have coverage at their jobs. The law makes government subsidies in the form of a tax credit available to discount monthly premiums for people with low- to moderate-incomes.

Potential Customers

California chose WellPoint Inc. (WLP) and a dozen other insurers to offer plans. About 5.3 million Californians will be eligible to buy coverage and about half may be eligible for the subsidies.

The U.S. Government Accountability Office said in June that computer systems for the nationwide exchange network may not be ready on time, and training for the people who will assist consumers was behind schedule. The Congressional Budget Office also raised questions in June about preparedness, citing delayed testing.

An exchange computer network must be able to loop in insurers in real-time while sharing data with the Internal Revenue Service, state tax offices, Medicaid and Medicare and other agencies in order to verify customer information.

The Obama administration has repeatedly expressed confidence that the exchanges will be ready for Oct. 1.

Advertising Campaign

The $1.3 trillion overhaul of the U.S. health-care system forces most Americans to obtain medical coverage from somewhere starting in 2014, and mandates that the majority of companies offer their workers a health-plan option. The law also includes measures that cut drug costs for seniors, cover children with pre-existing illnesses and let young adults stay on their parents’ plans.

Covered California earlier this month started a federally funded $80 million advertising and marketing campaign to teach people about the program and encourage them to sign up.

The California agency has sponsored 7,300 events at community centers, schools and churches throughout the state to explain the law and how to enroll. It also has trained 22,000 county workers across the state to help in screening applications for eligibility.

Fourteen states and Washington, D.C., are building their own exchanges. The other states will become partners with the federal government or leave the job to the Obama administration. By law, the markets must open in October to sell coverage that starts in January.

Republican politicians in states including Indiana, Ohio, Georgia and Florida have tried to discourage participation in the exchanges, warning consumers that premiums will rise as a result of the law’s requirement that insurers cover sick people.

BY Michael B. Marois

12 ways to avoid PPACA fines

Should employers pay any attention to all of the theoretical penalties that are tied to the requirements of the Patient Protection and Affordable Care Act?

If you’re feeling lucky, maybe not. But following the rules wouldn’t be a bad idea.

As implementation of key parts of the PPACA approach, the U.S. Department of Labor is underscoring two themes:

1. Employers are required to comply with rules like notifying employees of options, but …
2. if they don’t comply, it’s really up to them to report the infraction themselves, because the DOL says it isn’t going to enforce the rules.

Just last week, the DOL went on record saying that employers don’t need to worry about being fined for failing to notify their workers of their health coverage options in writing by Oct. 1.

So, as an employer, why bother if there’s no penalty?

Because fines might come from somewhere else aside from the DOL, says attorney Keith McMurdy, a partner with Fox Rothschild LLP in New York.

McMurdy has been wrestling with the comply-don’t comply dilemma for a while. Now, he said, he is recommending that companies simply comply, because failure to do so could come back to bite you.

McMurdy told BenefitsPro.com that the byzantine sanctions process surrounding the act offer several agencies the option to go after non-compliant employers – if they so choose. Among those who might come after a non-compliant employer:

• The IRS.
• DOL’s Wage and Hour Division, which administers the Fair Labor Standards Act, where the law’s notification requirement can be found (section 18B).
• An employee or an employee’s representative (i.e., a union or a labor lawyer) that might decide to file a lawsuit.

“Effectively, the DOL is saying, ‘We won’t penalize or fine you.’ But they are wording their position very carefully. What they don’t say is that someone else might decide to go ahead and enforce the sanctions,” McMurdy said. “How much of a stretch would it be for an employee at a company with 2,000-3,000 employees to decide to file a class-action suit on behalf of all the workers because you didn’t comply with the notification rule? Not only would you have to pay the fine, but all attorney fees as well.”

McMurdy posted a blog recently addressing this very subject, shortly after the DOL had released, in Q&A format on its website, information indicating it would not penalize those who don’t notify workers. Here’s what he wrote:

“1. The (DOL) FAQ provided on 9/11 says “(i)f your company is covered by the Fair Labor Standards Act, it should provide a written notice to its employees about the Health Insurance Marketplace by October 1, 2013, but there is no fine or penalty under the law for failing to provide the notice.” 

1. Technical Release 2013-02, from the DOL, says that Section 18B of the FLSA generally provides that “an applicable employer must provide” each employee a notice.
2. Section 18B of the FLSA definitely says that any employer subject to the FLSA “shall provide” written notice to current and future employees.

“My experience with the federal laws and the enforcement of said laws by federal agencies is that when things say “shall” and “must,” there are penalties when you don’t do them.  So when the DOL now takes the position that it is not a “shall” or “must” scenario, but rather only a “should” and “even if you don’t we won’t punish you” proposition, I get suspicious.  But I also think this confirms what I have said since the beginning about PPACA compliance for employers.  It is all about your risk-tolerance.

“Employers have to decide how much risk they are willing to take, either in the cost ofcomplying, the potential penalties or the risks associated with managing their workforce to comply with eligibility requirements.  In the face of uncertainty, employers have to decide how much money is worth saving now as compared to possible future costs of penalties or loss of employees.” 

It’s not just the insurance options notification situation that McMurdy says puts employers at risk. He offered the following examples of potential penalty-triggering act violations where employers could face $100-a-day fines:

1. PPACA limits restrictions. Group health plans may not establish any annual or lifetime dollar limits on essential health benefits — those core health benefits that have been defined by the act as basic elements for any coverage plan.

2. Failure to offer coverage to dependents up to the age of 26. Children of parents with health coverage up to age 26 must be offered coverage. 

3. Retroactive rescission of benefits. Health plans can’t cancel or discontinue coverage retroactively unless premiums/contributions aren’t paid for a certain period of time.

4. Failing to cover the preventative care services specified by the act. The law specifies certain preventative care services that all plans must cover without charging a co-pay or cost-sharing. While coverage of contraception tools has been the most controversial of these, it is but one of many listed by the PPACA. Others include various screenings, well-baby services and breast feeding support.

5.  Failing to have a revised appeal process (including external appeals) so people can challenge a claim denial. Designed to support patients faced with rejected insurance claims by their providers, this regulation requires health plans to include an appeals process for denied claims. 

6. Failing to provide timely notices. Insurance options isn’t the only one, it’s a long list. For instance, new employees must receive notification of their plan options, participants must receive notice that dependents up to age 26 are eligible for coverage and the list goes on and on.  

7.  Restrictions on emergency room visits. The act says patients don't need pre-authorization for ER visits, and any plan that requires such faces penalties. 

8. Restrictions on designation of primary care physicians so employees know they can choose any primary care physician if their plan requires them to pick on. Plans may recommend primary care practitioners but employees have the right to choose whoever they want to.

9. Improper pre-existing condition exclusions. Of course, this was one of the matters at the heart of healthcare reform. No one can be denied affordable coverage due to a pre-existing medical condition. No exceptions.

10. Failing to follow new out-of-pocket costs as outlined in the act. The act has created a formula for calculating out-of-pocket expenses that caps them for each plan. Exceeding these limits triggers the penalty clause. Figuring out the limit will be the real test, however. 

11. Violations of the 90-day waiting period limit for coverage under an employer-sponsored plan. Employers offering health coverage to employees cannot make employees wait longer than 90 days to be eligible for that coverage. 

12. Nondiscrimination rules. These rules prohibit employers from offering current or former workers healthcare coverage levels that aren’t available to all employees within the company. This is a sticky one, because top execs often get healthcare perks that grunts don’t receive.

By DAN COOK

Exchanges may draw 37 million already-covered workers

There’s been an enormous amount of speculation about employers dumping workers from health care plans, thanks to the Patient Protection and Affordable Care Act. Now, two academic studies suggest an altogether different outcome:

While few employers will use the act to drop their health plans, at least immediately, millions of workers who are covered at work could instead choose insurance through state exchanges.

How many millions? Roughly 37 million, according to Dr. Jay Bhattacharya of Stanford School of Medicine.

“The reason is that these workers would qualify for substantial subsidies to buy exchange insurance,” he said.

In other words, the subsidized Obamacare premium will be less than what they pay for employer-based insurance.

In the meantime, another study, from the University of Michigan, found that most employers will continue to offer health coverage to employees, despite having the opportunity to do away with it.

The Stanford School of Medicine team examined subsidy outlays for premiums and cost-sharing for individuals purchasing private insurance through exchanges.

What its investigation turned up could have profound implications for the government’s role in providing financial support for insurance purchased through the exchanges.

“Our findings show that changing theoretical premium contribution levels by just $100 could induce 2.25 million individuals to transition to exchanges and increase federal outlays by $6.7 billion. Policy makers and analysts should pay especially careful attention to participation rates as the act’s implementation continues,” the Stanford researchers cautioned.

About 170 million Americans have health insurance through their own job or through a family member's; such coverage is available to 80 percent of full-time workers.

The Stanford researchers noted that the existence of a “better deal” through a state exchange might not sway an employee to leave the security and comfort of coverage chosen by an employer. Rather, the study stressed that its findings indicated that state exchange insurance may turn out to be more successful than anyone originally thought at attracting customers.

The Michigan study said the net increase or decrease in the number of workers with employer-sponsored health insurance will be only a percent or two.

That corresponds with a survey released last month by the National Business Group on Health, which represents large employers. It found that 1 percent were considering moving current employees to exchanges in 2014, though 30 percent might do so after that. 

By Dan Cook

DBS Seminar Series, Understanding Your PBM

October 17, 2013 from 11:30am – 1pm ~ The Grand Colonial Hotel, La Jolla

Did you know renegotiating your PBM contract can save your company up to 50% on pharmacy costs?  

It is estimated that 26% of health plan costs are directly related to pharmacy expenses.  Join us for lunch October 17th at The Grande Colonial Hotel in La Jolla as we continue our seminar series on improving your employee health plan. This time around we'll  host Sr. Pharmacy Benefit Consultant, Todd Kurth. Todd will discuss how PBMs (Pharmacy Benefit Management) companies make their money and how employers can negotiate their PBM contract to lower their pharmacy costs. He will highlight carve out options available to you through your current plan and present case studies of DBS clients.  This information will be most useful for companies that are self-funded, considering self-funding, or who have over one hundred employees on their fully insured plan.  Please register in advance or contact Andrew Oram @ AndrewO@discoverybenefitsolutions.com  

This is a complimentary event for benefit plan administrators and advisers.  Space limited.

September Legislative Update

Recognition of Same-sex Marriages for Federal Tax Purposes

As a follow-up to the overruling of the Defense of Marriage Act (DOMA), the Internal Revenue Service (IRS) recently released IR-2013-72, which announced the U.S. Department of Treasury and IRS will recognize same-sex marriages and treat the couples as married for federal tax purposes. Revenue Ruling 2013-17 applies regardless of whether the couple lives where same-sex marriages may or may not be recognized.

Key Points of the Ruling Tax Treatment of Same-sex Spouses For federal tax purposes, same-sex spouses are treated as married. Applies to income, gift, and estate taxes. Also applies to all federal tax provisions where marriage is a factor: Employee benefits Filing status Personal and dependency exemptions Taking standard deduction IRA contributions Claiming earned income tax credit or child tax credit Legal Marriage Same-sex couples must be legally married in: One of the 50 states District of Columbia U.S. territory Foreign country Ruling does not apply to couples in these relationships: Registered domestic partnership Civil unions Similar formal relationships recognized under state law 2013 Federal Income Tax Returns Legally married same-sex couples generally must file jointly or married but filing separately. Tax Years Open Under Statute of Limitations Individuals who were in same-sex marriages may - but are not required to - file original or amended returns if they want to be treated as married for tax purposes for one or more prior tax years that are still open under the statute of limitations. Statute of limitations for filing a refund claim is generally (whichever is later): Three years from the date the return was filed; or Two years from the date the tax was paid. Refund claims may still be filed for tax years 2010, 2011, and 2012. Some individuals may have special circumstances (i.e., signing an agreement with the IRS to keep the statute of limitations open), which may permit taxpayers to file refund claims for tax years 2009 and earlier. Health Insurance If employees purchased same-sex spouse health insurance coverage from employers on an after-tax basis, those employees may treat the amount paid for coverage as pre-tax and exclude that cost from their income.

Upcoming Guidance

According to the Treasury and IRS, additional guidance will be forthcoming. Employers can expect guidance for filing refund claims for payroll taxes on previously taxed health insurance and fringe benefits provided to same-sex spouses. In addition, further guidance for cafeteria plans will be issued as well as how employers should treat qualified retirement plans and other tax-favored arrangements for same-sex spouses for periods prior to Revenue Ruling 2013-17. Other federal agencies may release similar guidance affected by the Internal Revenue Code.

Beginning September 16, 2013, the Treasury and IRS will apply the terms of Revenue Ruling 2013-17. Taxpayers wanting to rely on the Ruling's terms may proceed, as long as the statute of limitations for the earlier period has not ended. Amended refund claim forms and filing instructionsare available on the IRS website as well as helpful FAQs. Sept

SOURCE: CONEXIS

Get Ready for Enrollment in Health Exchanges

By 
• KRISTEN GERENCHER

In about six weeks, Americans will have a new kind of open enrollment to consider.

Starting Oct. 1, people without health insurance can sign up for standardized coverage through new health-insurance marketplaces run either by their state, the federal government or a combination of the two—the centerpiece of the Patient Protection and Affordable Care Act.

WSJ peers into the future with this first-person look at how the Affordable Care Act, commonly known as 'Obamacare,' will impact individuals. Visit wsj.com/prescribed for the interactive version of this video.

The coverage will take effect Jan. 1. And people with incomes between 100% and 400% of the federal poverty level—about $23,500 to $94,000 for a family of four—can receive financial help on a sliding scale to offset the costs.

These marketplaces, also known as exchanges, will make shopping for health insurance easier than it is today, says Sarah Dash, a research fellow at Georgetown University who has studied the new marketplaces. "Consumers are going to get a much more transparent, apples-to-apples shopping experience."

If you have affordable insurance through an employer, or if you have coverage through a government program such as Medicare or Medicaid, you won't be affected by the exchanges.

Exchange shoppers will fill out a single insurance application, which will be used to "find out if they can get a tax credit on their premium, help with cost-sharing or if they're eligible for Medicaid in their state," Ms. Dash says.

You can calculate your potential premium assistance with an online tool from the Kaiser Family Foundation, which conducts health-care research.

This first open-enrollment period will last six months, from Oct. 1, 2013 to March 31, 2014. It generally takes two weeks for a policy to go into effect after enrolling, so you'll need to sign up by Dec. 15 to get coverage starting Jan. 1.

You can sign up by using the Internet, phone, mail or in person at a designated center. The centers will have people trained to help with the enrollment process, according to the U.S. Department of Health and Human Services. Insurance agents and brokers may be there as well. In many states, people who enroll online can tap into a live chat window for customer-service troubleshooting.

Many state call centers already are running. Visit Healthcare.gov or call 1-800-318-2596 for more information.

The law states that people looking for insurance can't be denied coverage or charged higher premiums because of pre-existing health conditions. However, premiums can vary based on four characteristics: age, tobacco use, geographic area and family size—though there are limits. Older people may be charged up to three times as much as younger people and smokers may be charged up to 50% more than nonsmokers.

The law also requires that health-insurance plans cover a set of 10 essential benefits such as hospitalization, doctors' visits, prescription drugs, maternity care, pediatric care, and substance-abuse and mental-health care.

Before diving into the enrollment process, be sure to have the Social Security numbers of the people you're looking to insure; employment and income information, such as pay stubs, tax return or W-2 form; and policy numbers if you currently have any health insurance. Eligibility for tax credits and subsidies is based on modified adjusted gross income.

Five different plan levels will be available on the new marketplaces. Four of the levels have metal names: bronze, silver, gold and platinum.

The bronze plan generally offers the lowest premium in exchange for the highest out-of-pocket costs. The silver level is the level you must choose if you want to get financial help with out-of-pocket costs such as copayments and deductibles. "I call the silver level a mid-range plan," says Sarah Lueck, senior policy analyst for the Center on Budget and Policy Priorities, a public-policy research organization in Washington. Under the gold and platinum levels, premiums will be higher, but your share of costs when you get health care will be lower.

The fifth level, a catastrophic plan, is available for people younger than 30 and those suffering financial hardship.

Think about how much coverage you can afford and how much care you anticipate needing, says Carter Price, a mathematician with Rand, a nonprofit research group in Arlington, Va. "People will need to decide what level of coverage they want to take, whether it's very bare-bones or very generous."