Insurers do not need to cancel old plans

Under heavy pressure by congressional Democrats to fix Obamacare, President Barack Obama announced Thursday that the administration will allow insurance companies to keep individual customers on their existing plans for an additional year, even if the plans don't meet the law's standards. 

The president's plan does not require the insurance companies to take back the Americans they kicked off, but does give them the option of taking the customers back if they want. The government will inform state insurance commissioners that they have permission to allow insurers to offer the out-of-date private plans for an additional year. It's up to them whether to allow them to continue or not.

Obama has been caught between two problems of his administration’s own making: millions of cancellations of individual health care coverage despite his pledge that “if you like your plan, you can keep it” and a botched federal website that was supposed to allow Americans to buy new insurance.

"I completely get how upsetting this can be for a lot of Americans," a contrite Obama told reporters Thursday afternoon. "Americans whose plans have been canceled can choose to enroll in the same kind of plan."

The cancellations, estimated to affect up to 7 million Americans, are due to new standards in the Affordable Care Act that insurance 

The cancellations, estimated to affect up to 7 million Americans, are due to new standards in the Affordable Care Act that insurance companies are required to meet. Those who received cancellations were expected to go on to the new federal insurance marketplace — which has been plagued by tech problems since its Oct. 1 rollout — and purchase coverage there. About 5 percent of insured Americans get their insurance on the individual market.

But it remains unclear whether insurance companies will rescind the cancellations they’ve already handed out, since the Obama administration is not requiring them to do so. And the extension is only for one year, so the fix only delays the fact that many Americans will not be able to keep their current insurance under the new law.

The administration argues that many of the canceled plans were subpar and that many people can buy better insurance for less on the federal marketplace. The law significantly overhauled the individual insurance market, prohibiting plans that kick people off if they become sick or hiking premiums due to illness, among other reforms.

Obama said he believes the Affordable Care Act will work, but admitted the rollout of the exchanges has been bad. "We fumbled the rollout of this health care law," he said. The president added that he was not informed that the glitches in HealthCare.gov were so extensive and crippling — he believed they were minor and not systemic before Oct. 1.

With his second term — and his legacy — in the balance, Obama frequently seemed deflated, almost defeated, light-years away from his soaring “audacity of hope” or the “fierce urgency of now” that powered his eager first term.

Things will get better, he promised, “if we can just get the darn website working and smooth this thing out.”

“I make no apologies for us taking this on because somebody, sooner or later, had to do it,” the president said. “I do make apologies for not having executed better over the last several months.”

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President Barack Obama speaks about his signature health care law, Thursday, Nov. 14, 2013, in the B …

And he offered worried and angry congressional Democrats — many of whom fear the Affordable Care Act will prove a potent Republican weapon in the 2014 midterm elections — a kind of “I feel your pain” moment.

“There is no doubt that our failure to roll out the ACA smoothly has put a burden on Democrats, whether they're running or not, because they stood up and supported this effort through thick and thin and, you know, I feel deeply responsible for making it harder for them rather than easier for them,” he said. “We’re letting them down.”

But he took more personal responsibility for the botched rollout than he has before in public.

“There have been times where I thought we, you know, got slapped around a little bit unjustly. This one's deserved, all right? It's on us,” he said.

After promising on Oct. 1 that buying insurance on the federal website would work “the same way you’d shop for a plane ticket on Kayak or a TV on Amazon,” a more chastened Obama acknowledged that “buying health insurance is never going to be like buying a song on iTunes.”

Boehner: Only Health Care Fix Is Scrap LawPlay video."

He denied any deliberate attempt to mislead the public or that he was hasty in rolling out the website even as internal tests showed it would fail.

“I'm accused of a lot of things, but I don't think I'm stupid enough to go around saying, ‘this is going to be like shopping on Amazon or Travelocity,’ a week before the website opens, if I thought that it wasn't going to work,” he said.

As he closed the press conference, Obama dug for a more upbeat, combative message.

“Part of this job is, the things that go right, you guys aren't going to write about. The things that go wrong get prominent attention; that's how it's always been. That's not unique to me as president, and I'm up to the challenge,” he said.

Democrats crafted a bill that would require insurance companies to keep on the millions of customers, pressuring Obama to make the fix. Sen. Mary Landrieu, the bill's sponsor, said in a statement that she appreciated the president's announcement and would continue to "support legislation to fix this problem."

Republicans, meanwhile, have pounded away at Obama’s false promise and failed website to hammer home their message that the president is neither honest nor a competent manager.

"There is no way to fix this," Republican House Speaker John Boehner said. "I am highly skeptical that they can do this administratively."

Obama's statement is part of an all-out push to rescue the law. The White House was to host Senate Democrats later in the day, while chief of staff Denis McDonough was expected on Capitol Hill to reassure House Democrats.

By Liz Goodwin and Olivier Knox

Health FSA Use-It-or-Lose-It Rule Modified to Allow $500 Carryover

In the recently released Notice 2013-71, the IRS modified its use-it-or-lose-it rule for Health Flexible Spending Accounts (FSAs). The ruling permits Health FSAs to adopt carryover provisions that allow up to $500 of unused funds remaining at the end of a plan year to reimburse medical expenses incurred in the following plan year.

Some important information for plan sponsors to note:

* A plan may not have both a carryover and a grace period provision. The grace period refers to a plan which allows participants an additional 2½ months from the close of the plan year to incur expenses attributable to the prior year's election. Also, such provisions are not required - a plan may choose to adopt neither a carryover nor grace period.

* Additional rules apply to plans that must be amended to eliminate a grace period. If a plan has provided for a grace period and is being amended to add a carryover provision, the plan must also be amended to eliminate the grace period provision by no later than the end of the plan year from which amounts may be carried over.

* Carryovers will not count against the annual limit on Health FSA salary reductions (currently $2,500).

* A plan sponsor may choose a carryover amount that is less than $500.

* Any amount in excess of $500 (or a lower amount specified in the plan) that remains unused as of the end of the plan year (that is, at the end of the run-out period for the plan year) is forfeited. Any unused amount remaining in an employee's health FSA as of termination of employment also is forfeited unless the employee elects COBRA continuation coverage with respect to the Health FSA.

* In general, amendments must be adopted on or before the last day of the plan year from which amounts may be carried over, although employers satisfying certain requirements have until the end of the 2014 plan year to formally adopt carryover amendments for the 2013 plan year.

* Plan sponsors offering a Health Savings Account (HSA) may have special considerations when deciding whether to move forward with the $500 carryover provision for their Health FSA. Although not addressed in the recent guidance, individuals who are covered by general-purpose Health FSAs are not eligible for HSA contributions. Given previous IRS guidance on the 2½ month grace period, it is possible that IRS rules regarding ineligibility for HSA contributions will apply to the new carryover feature as well.

For plans that want to add the $500 carryover, DBS does recommend that you consider implementing for a future date. This will give you time to communicate the change and give participants time to appropriately plan their elections. Further, plans that are switching from a grace period to carryover can avoid issues with participants who may still have high balances in their Health FSA at the end of the current plan year. 

Source: Health Now Administrative Services

OBAMA ADMINISTRATION ANNOUNCES TRANSITION POLICY FOR CANCELED HEALTH PLANS

On November 14, 2013, President Obama announced a new transition policy in response to pressure from both consumers and Congress over the cancellation of millions of individual and small group insurance policies that did not comply with the Affordable Care Act (ACA)'s reforms set to take effect beginning on January 1, 2014.

Under the new policy, individuals and small businesses whose coverage had been canceled (or would be canceled) because it will not meet the ACA's standards may be able to re-enroll or stay on their coverage for an additional year. This one-year reprieve may not be available to all consumers because the insurance market is primarily regulated at the state level, and thus, state governors or insurance commissioners will have to allow for the transition relief. Also, health insurance issuers are not required to follow the transition relief and renew plans, and have expressed concern that the change could disrupt the new risk pool under the federal and state health insurance marketplaces (Marketplace).

TRANSITION RELIEF POLICY

The Department of Health and Human Services (HHS) outlined the transition policy in a letter to state insurance commissioners. Under this transitional policy, for 2014, health insurance issuers may choose to continue coverage that would otherwise be terminated or canceled due to the ACA's reforms, and affected individuals and small business may choose to re-enroll in that coverage.

Health insurance coverage in the individual or small group market that is renewed for a policy year starting between January 1, 2014, and October 1, 2014 (and associated group health plans of small businesses), will not be considered to be out of compliance with specified ACA reforms as long as certain conditions are met.
Requirements for Transition Relief

The transition relief only applies with respect to individuals and small businesses with coverage that was in effect on October 1, 2013. The transitional relief is not available to grandfathered plans because these plans are not subject to most of the ACA's market reforms. It also does not apply with respect to individuals and small businesses that obtain new coverage after October 1, 2013. All new plans must comply with the full set of ACA reforms. Furthermore, the health insurance issuer must send a notice to all individuals and small businesses that received a cancelation or termination notice with respect to the coverage (or to all individuals and small businesses that would otherwise receive a cancelation or termination notice with respect to the coverage).

Notice Requirements

The notice to individuals and small businesses must provide the following information:
Any changes in the options that are available to them;
Which of the specified ACA reforms would not be reflected in any coverage that continues;
Their potential right to enroll in a qualified health plan offered through a Marketplace and possibly qualify for financial assistance;
How to access such coverage through a Marketplace; and
Their right to enroll in health insurance coverage outside of a Marketplace that complies with the specified market reforms.

Where individuals or small businesses have already received a cancelation or termination notice, the issuer must send this notice as soon as reasonably possible. Where individuals or small business would otherwise receive a cancelation or termination notice, the issuer must send this notice by the time that it would otherwise send the cancelation or termination notice.
According to HHS, it will consider the impact of the transition relief in assessing whether to extend it beyond the specified timeframe.
By Burnham Benefits

The Youtoons Get Ready For Obamacare

This video will help you understand Obamacare in under 7 minutes.

Self-insurance: A threat to Obamacare?

Happy Jack Adventures is a successful small business, much like the many others the federal government hopes will line up to buy health insurance for their workers once the Patient Protection and Affordable Care Act fully kicks in.

Yet fearful of sharp premium hikes and with a mostly young, seemingly healthy workforce of 50, Jack McCormick, the founder and CEO of the Seattle, Wash.-based adventure tourism company, has something else in mind.

McCormick believes his firm is fiscally sound enough to bear the risk of self-insurance and is looking to make the switch.

“(Self-insurance) looks like a good option for us and a way to avoid high premiums and other hidden costs we don’t know about yet,” he said. “I call those gotcha costs, and I hate those. Everyone does.”

It’s views like these that researchers and analysts have speculated could threaten the integrity of the PPACA, with small employers avoiding the requirements of the law altogether by going the self-insurance route and, along the way, potentially driving up the health care premiums the government is hoping to contain.

About 60 percent of insured American workers already are in self-insurance plans. Most of these workers are either in unions or employed by larger companies.

Self-insured employers pay for most worker health costs directly, though they typically contract with an insurer or another company to administer claims. Employers that self-insure buy coverage known as stop-loss to keep one huge claim from wiping them out.

Brokers say a growing number of organizations see such plans as low-cost alternatives to conventional coverage, given that they’re exempt from PPACA requirements such as insurance taxes and specified benefits.

“I’ve been at this over 30 years, and interest in the self-insurance market definitely is increasing,” said Larry Thompson, CEO of BSI Strategic Consulting, a Fresno, Calif.-based firm that specializes in self-insurance.

According to a recent study by Munich Health North America, a subsidiary of reinsurer Munich Re, more employers are expected to follow the self-insure path – perhaps many more.

Among the 326 industry executives surveyed, 82 percent said they have seen a growing level of interest among employers in self-funding their group health insurance plans over the past 12 months, with nearly one-third saying that interest has increased “significantly.”

Nearly 70 percent of health insurance organizations plan on growing their self-funding portfolios over the next year, the survey also found.

Still, self-insured plans today remain far more common among large employers, especially those with at least 1,000 employees. Their size gives these employers bargaining power in the health care market and allows them to pool risk across their employees.

According to a Kaiser Family Foundation Survey, just 15 percent of insured workers at firms with fewer than 200 employees are enrolled in self-insured plans, compared to 81 percent of insured workers at larger firms.

But, again, smaller employers are now increasingly exploring this option and large health insurers such as United Health Group and Humana are helping these employers – including those with as few as 10 members – sign up.

Historically, concerns about the financial risks have discouraged most small firms from self-insuring, said Amado Cordova, a senior engineer at RAND, a think tank that seeks to influence policy and decision making through research and analysis.

Cordova said that if the PPACA does lead to big premium increases, it’s likely small employers will find self-insurance more attractive.

And if significant numbers of small firms with healthy, young workers self-insure, this could have far-reaching implications including potentially increasing health care premiums for companies that choose to remain on the regulated market, she said.

He said whether more small firms self-insure may depend less on PPACA and more on the companies that sell stop-loss coverage.

“There are already many signs that insurers are trying to lure small firms into self-insuring by advertising low stop-loss attachment points,” she said in her RAND blog. “This inducement to self-insurance could be counterbalanced by government action, in order to maintain a balance of healthy and less-healthy employees across the marketplace.”

Some states already are looking at limitations to self-insurance coverage, Cordova said. California, Rhode Island and Minnesota are mulling over legislation that raises the point at which stop-loss insurance kicks in, reducing or eliminating small firms’ ability to self-insure.

In February, the Self-Insurance Institute of America announced the formation of the Self-Insurance Defense Coalition. The purpose of the new coalition is to coordinate lobbying, litigation and media relations activities of leading national trade associations on issues related to self-insured group health plans at both the federal and state levels.

Among those pushing back is the Center for American Progress, a liberal Washington think tank, which has openly declared war on self-insurance.

In a whitepaper entitled “The Threat of Self-Insured Plans Among Small Businesses,” the group predicted that the increasing popularity of self-insurance will “cause an insurance premium death spiral and threaten the stability of the (Obamacare) exchanges.”

By Gina Binole

Self-insured win partial PPACA fee exemption

Self-insured employers and self-administered health plans are about to catch a break, thanks to fine-tuning of the Patient Protection and Affordable Care Act by the Department of Health and Human Services.

In a soon-to-be-published compendium of rule modifications, HHS says it will exempt certain self-insured employers from the second two years of paying the reinsurance fee.

HHS says the proposed modifications — of which there are quite a few — are the result of its “listening” sessions with interested parties about specific requirements of the act. The full list can be found in the proposal, “Program Integrity: Exchange, Premium Stabilization Programs, and Market Standards; Amendments to the HHS Notice of Benefit and Payment Parameters for 2014.”

Mike Ferguson, the CEO of the Self-Insured Institute of America, welcomed the news.

"SIIA certainly has communicated the view to members of Congress and regulators that the reinsurance fee is unfair to self-insured employers," he said, adding, "We were frankly surprised to hear about this development and are trying to find out more details just like you."

Indeed, HHS didn't offer a whole lot of detail on the exemption matter. It said in order to address employer feedback that the fees are burdensome, it will accept payment of the fee in two chunks instead of one (at the beginning of 2014 and at the end of the year) and will “exempt certain self-insured, self-administered plans from the requirement to make reinsurance contributions for the 2015 and 2016 benefit years” in future rulemaking and/or guidance proposals.

However, all employers will be required to pay the first-year fee for the program, which begins in 2014.

The 2014 fee for the three-year Transitional Reinsurance Program was set at $63 per plan participant. Fee levels have not been set for 2015 and 2016.

The fees are designed to yield $25 billion over the three-year program – money that would help offset costs incurred by insurers covering high-cost individuals purchasing coverage in public insurance exchanges.

HHS’s missive addressed other matters, including what happens when a small company buys small group insurance, and then it becomes a large company. The employer can keep the small group insurance package as long as it doesn’t make substantial modifications to it. But if discontinues small group coverage, it will then have to purchase insurance through the large group exchanges.

HHS also promised to provide further guidance on the sticky issue of what constitutes a fulltime employee for purposes of the all-important employee head count.

The proposals are scheduled to be published in the Federal Register on Wednesday.

By Dan Cook