Colorado Health Benefit Exchange Board Sets 1.4 Percent Fee For Policies

The Kaiser Health News  (3/14, Whitney) “Capsules” blog reports that Colorado’s insurance exchange board, set up under the Affordable Care Act, voted on its fees Monday, adding a 1.4 percent tax to policies in the state to “help fund exchange operations.” Board Chairwoman Gretchen Hammer characterized the fee “as lean compared with the 3.5 percent fee the federal government is expected to tack on to policies sold in states that are not setting up their own exchanges.” Colorado’s exchange board “estimates it will need $22 million to $24 million annually to function,” and is “pitching the fee as one several ‘balanced revenue sources’ to meet those expenses.”

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Small Businesses and the Federal Health Law (ACA)

The Affordable Care Act (ACA) contains several provisions that directly impact small businesses. Many of the provisions – including the creation of health insurance exchanges and the availability of a small employer tax credit – aim to provide more affordable coverage options for small employers. The law also creates market-wide reforms on small group plans and places new administrative requirements on employers. Click Here for more.  (From the Colorado Health Benefit Exchange, Patty Fontneau)

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Colorado Health Benefit Exchange Will Become Connect for Health Colorado

Colorado’s new health insurance marketplace, the Colorado Health Benefit Exchange will be called Connect for Health Colorado with an official launch in Spring 2013 to prepare for their October 2013 opening. Click here for the official press release.

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Individual Shared Responsibility Provision of the ACA

Basic Information


1.    What is the individual shared responsibility provision?


Under the Affordable Care Act, the Federal government, State governments, insurers, employers, and individuals are given shared responsibility to reform and improve the availability, quality, and affordability of health insurance coverage in the United States. Starting in 2014, the individual shared responsibility provision calls for each individual to have minimum essential health coverage (known as minimum essential coverage) for each month, qualify for an exemption, or make a payment when filing his or her federal income tax return.


2.    Who is subject to the individual shared responsibility provision?


The provision applies to individuals of all ages, including children. The adult or married couple who can claim a child or another individual as a dependent for federal income tax purposes is responsible for making the payment if the dependent does not have coverage or an exemption.


3.    When does the individual shared responsibility provision go into effect?


The provision goes into effect on January 1, 2014. It applies to each month in the calendar year. The amount of any payment owed takes into account the number of months in a given year an individual is without coverage or an exemption.


4.    What counts as minimum essential coverage?


Minimum essential coverage includes at a minimum all of the following:


  • Employer?sponsored coverage (including COBRA coverage and retiree coverage)
  • Coverage purchased in the individual market
  • Medicare coverage (including Medicare Advantage)
  • Medicaid coverage
  • Children’s Health Insurance Program (CHIP) coverage
  • Certain types of Veterans health coverage


Minimum essential coverage does not include specialized coverage, such as coverage only for vision care or dental care, workers’ compensation, disability policies, or coverage only for a specific disease or condition.

The Department of Health and Human Services (HHS) has authority to designate additional types of coverage as minimum essential coverage. Information on additional coverage that HHS has proposed to designate as minimum essential coverage, including student health plans and coverage provided by foreign governments is available online.


5. What are the statutory exemptions from the requirement to obtain minimum essential coverage?


(1) Religious conscience: You are a member of a religious sect that is recognized as conscientiously opposed to accepting any insurance benefits. The Social Security Administration administers the process for recognizing these sects according to the criteria in the law.

(2) Health care sharing ministry: You are a member of a recognized health care sharing ministry.

(3) Indian tribes: You are a member of a federally recognized Indian tribe.

(4) No filing requirement: Your household income is below the minimum threshold for filing a tax return. The requirement to file a federal tax return depends on your filing status, age, and types and amounts of income. To find out if you are required to file a federal tax return, use the IRS Interactive Tax Assistant (ITA).

(5) Short coverage gap: You went without coverage for less than three consecutive months during the year. For more information see question 21.

(6) Hardship: A Health Insurance Marketplace, also known as an Affordable Insurance Exchange, has certified that you have suffered a hardship that makes you unable to obtain coverage.

(7) Unaffordable coverage options: You can’t afford coverage because the

minimum amount you must pay for the premiums is more than eight percent of your household income.

(8) Incarceration: You are in a jail, prison, or similar penal institution or correctional facility after the disposition of charges against you.

(9) Not lawfully present: You are neither a U.S. citizen, a U.S. national, nor an alien lawfully present in the U.S.


6. What do I need to do if I want to be sure I have minimum essential coverage or an exemption for 2014?


Most individuals in the United States have health coverage today that will count as minimum essential coverage and will not need to do anything more than continue the coverage that they have. For those who do not have coverage, who anticipate discontinuing the coverage they have currently, or who want to explore whether more affordable options are available, Health Insurance Marketplaces (also know as Affordable Insurance Exchanges) will open for every state and the District of Columbia in October of 2013. These Health Insurance Marketplaces will help qualified individuals find minimum essential coverage that fits their budget and potentially financial assistance to help with the costs of coverage beginning in 2014. The Health Insurance Marketplace will also be able to assess whether applicants are eligible for Medicaid or the Children’s Health Insurance Program (CHIP). For those who will become eligible for Medicare during 2013, enrolling for Medicare will also ensure that you have minimum essential coverage for 2014.


For those seeking an exemption, a Health Insurance Marketplace will be able to provide certificates of exemption for many of the exemption categories. HHS has proposed regulations on how a Health Insurance Marketplace will go about granting these exemptions. Individuals will also be able to claim exemptions for 2014 when they file their federal income tax returns in 2015. Individuals who are not required to file a federal income tax return are automatically exempt and do not need to take any further action to secure an exemption. See question 20 for further information on exemptions.

For more information about the Health Insurance Marketplace, including how to sign up for email updates and tips on how to prepare for open enrollment in October 2013, visit: or call us at 303-423-0162 ext 100.


7. Is more detailed information available about the individual shared responsibility provision?


Yes. Treasury and the IRS have proposed regulations on the new individual shared responsibility provision. Comments on the proposed regulations may be submitted by mail, electronically, or by hand?delivery, and are due by May 2, 2013.


Who is Affected?


8. Are children subject to the individual shared responsibility provision?

Yes. Each child must have minimum essential coverage or qualify for an exemption for each month in the calendar year. Otherwise, the adult or married couple who can claim the child as a dependent for federal income tax purposes will owe a payment.


9. Are senior citizens subject to the individual shared responsibility provision?


Yes. Senior citizens must have minimum essential coverage or qualify for an exemption for each month in a calendar year. Senior citizens will have minimum essential coverage for every month they are enrolled in Medicare.


10. Are all individuals living in the United States subject to the individual shared responsibility provision?


All citizens are subject to the individual shared responsibility provision as are all permanent residents and all foreign nationals who are in the United States long enough during a calendar year to qualify as resident aliens for tax purposes. Foreign nationals who live in the United States for a short enough period that they do not become resident aliens for federal income tax purposes are not subject to the individual shared responsibility payment even though they may have to file a US income tax return. The IRS has more information available on when a foreign national becomes a resident alien for federal income tax purposes.


11. Are US citizens living abroad subject to the individual shared responsibility provision?


Yes. However, US citizens who live abroad for a calendar year (or at least 330 days within a 12 month period) are treated as having minimum essential coverage for the year (or period). These are individuals who qualify for an exclusion from income under section 911 of the Code. See Publication 54 for further information on the section 911 exclusion. They need take no further action to comply with the individual shared responsibility provision.


12. Are residents of the territories subject to the individual shared responsibility provision?


All bona fide residents of the United States territories are treated by law as having minimum essential coverage. They are not required to take any action to comply with the individual shared responsibility provision.



Minimum Essential Coverage


13. If I receive my coverage from my spouse’s employer, will I have minimum essential coverage?


Yes. Employer?sponsored coverage is generally minimum essential coverage. (See question 4 for information on specialized types of coverage that are not minimum essential coverage.) If an employee enrolls in employer?sponsored coverage for himself and his family, the employee and all of the covered family members have minimum essential coverage.


14. Do my spouse and dependent children have to be covered under the same policy or plan that covers me?


No. You, your spouse and your dependent children do not have to be covered under the same policy or plan. However, you, your spouse and each dependent child for whom you may claim a personal exemption on your federal income tax return must have minimum essential coverage or qualify for an exemption, or you will owe a payment when you file.


15. My employer tells me that our company’s health plan is “grandfathered.” Does my employer’s plan provide minimum essential coverage?


Yes. Grandfathered group health plans provide minimum essential coverage.


16. I am a retiree, and I am too young to be eligible for Medicare. I receive my health coverage through a retiree plan made available by my former employer. Is the retiree plan minimum essential coverage?


Yes. Retiree health plans are generally minimum essential coverage.


17. I work for a local government that provides me with health coverage. Is my coverage minimum essential coverage?


Yes. Employer?sponsored coverage is minimum essential coverage regardless of whether the employer is a governmental, nonprofit, or for?profit entity.


18. Do I have to be covered for an entire calendar month in order to get credit for having minimum essential coverage for that month?


No. You will be treated as having minimum essential coverage for a month as long as you have coverage for at least one day during that month.


19. If I change health coverage during the year and end up with a gap when I am not covered, will I owe a payment?


Individuals are treated as having minimum essential coverage for a calendar month if they have coverage for at least one day during that month. Additionally, as long as the gap in coverage is less than three months, you may qualify for an exemption and not owe a payment. See question 21 for more information on the exemption for short coverage gaps.




20. If I think I qualify for an exemption, how do I claim it?


It depends upon which exemption it is.


  • • The religious conscience exemption and the hardship exemption are available only by going to a Health Insurance Marketplace, also known as an Affordable Insurance Exchange, and applying for an exemption certificate. Information on proposed rules for obtaining this exemption is available online.
  • • The exemptions for members of Indian tribes, members of health care sharing ministries, and individuals who are incarcerated are available either by going to a Marketplace or Exchange and applying for an exemption certificate or by claiming the exemption as part of filing a federal income tax return.
  • • The exemptions for unaffordable coverage, short coverage gaps, and individuals who are not lawfully present in the United States can be claimed only as part of filing a federal income tax return. The exemption for those under the federal income tax return filing threshold is available automatically. No special action is needed.


21. What qualifies as a short coverage gap?


In general, a gap in coverage that lasts less than three months qualifies as a short coverage gap. If an individual has two short coverage gaps during a year, the short coverage gap exemption only applies to the first or earlier gap.


22. If my income is so low that I am not required to file a federal income tax return, do I need to do anything special to claim an exemption from the individual shared responsibility provision?


No. Individuals who are not required to file a tax return for a year are automatically exempt from owing a shared responsibility payment for that year and do not need to take any further action to secure an exemption.


Reporting Coverage or Exemptions or Making Payments


23. Will I have to do something on my federal income tax return to show that I had coverage or an exemption?


The individual shared responsibility provision goes into effect in 2014. You will not have to account for coverage or exemptions or to make any payments until you file your 2014 federal income tax return in 2015. Information will be made available later about how the income tax return will take account of coverage and exemptions. Insurers will be required to provide everyone that they cover each year with information that will help them demonstrate they had coverage.


24. What happens if I do not have minimum essential coverage, and I cannot afford to make the payment with my tax return?


The IRS routinely works with taxpayers who owe amounts they cannot afford to pay. The law prohibits the IRS from using liens or levies to collect any payment you owe related to the individual responsibility provision, if you, your spouse or a dependent included on your tax return does not have minimum essential coverage.

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No Way for Stand-Alone HRAs

The Department of Labor issued a new frequently asked questions document about PPACA implementation that addressed both employer exchange notification requirements and the future for stand-alone HRA plans. The FAQ formally delayed the requirement that all employers subject to the Fair Labor Standards Act (which is virtually all employers, not just those that offer health coverage) provide their employees with notice about the coming health insurance exchanges by March 1, 2013.

The frequently asked questions document from DOL addresses “stand-alone” health reimbursement arrangements offered by employers, meaning those HRA plans that are not integrated with a group major-medical policy offering. To date, when implementing PPACA, the Administration has always differentiated between integrated HRAs and those that are freestanding and serve as the employer’s primary means of providing benefits to employees. Integrated HRAs have always been considered exempt from the PPACA provisions directed at qualified health plans like rating requirements, benefit mandates and annual or lifetime limits, but it was left unclear as to how stand-alone HRAs would ultimately be treated. Stand-alone HRAs were given a blanket waiver by HHS from the law’s annual and lifetime limit provisions from 2011 until 2014, but now it has been made clear that the annual limit provisions will apply to HRAs moving forward. So in practical terms, that means employers will no longer be able to offer stand-alone HRA plans. Additionally, the FAQ clarifies that an employer-sponsored HRA may not be integrated with individual market coverage or with an employer plan that provides coverage through individual policies. Also, an employer-sponsored HRA may be treated as integrated with other coverage only if the employee receiving the HRA is actually enrolled in that coverage. So if you had an employer client asking if they could drop group coverage and use an HRA to help individuals purchase coverage through an exchange instead, this guidance clearly establishes the answer to that question is

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Obamacare mandate may be ‘mandate plus’

By: David Nather January 13, 2013 11:22 PM EST
Can’t get enough of Obamacare’s individual mandate? Get ready for “mandate plus.”

The Obama administration always said there was a practical reason it needed the mandate, which starts next year. It wasn’t to be mean to people — it was supposed to pull in enough healthy customers to help pay for all the sick people who will get coverage. That’s why the White House stuck with it all the way to the Supreme Court — however unpopular politically, it was the best tool to make the new health system work.

Here’s the catch: The individual mandate penalties will be pretty weak as they are phased in over two years — only $95 when they start in 2014, much less than it costs to buy insurance. And yet, everyone with pre-existing conditions will have to be accepted for coverage right away.

That’s why insurance companies are telling the administration the mandate won’t be enough for the first two years. They want more incentives — such as a late enrollment fee — to get healthy people to sign up quickly. Without getting the healthy folks in, the fear is that everyone’s health insurance premiums could shoot through the roof when all those sick people get their coverage.

The idea is being called “mandate plus” — because some of the ideas were floated by health experts last year as replacements, in case the Supreme Court struck the mandate down. Now that the mandate is here to stay, insurance companies and some policy experts say the other ideas should go hand in hand with the coverage requirement to make the whole system work — and be affordable.

The states could impose some of these incentives, too, and they could become a future lobbying battleground. But right now, the insurers are focused on persuading the Department of Health and Human Services to add them on its own.

“The key really is, how do you get younger people to buy coverage?” said Justine Handelman, vice president for legislative and regulatory policy at the Blue Cross and Blue Shield Association. “If you can jump in and out every time you need services, costs will go up.”

The mandate is the “stick” that’s supposed to prevent that, by making people pay a penalty (or as the Supreme Court called it, a tax) if they don’t get health coverage when they’re eligible. When the mandate is at full strength in 2016, people will pay $695 or 2.5 percent of their income, whichever is greater.

But from a practical perspective, it’s really not that much of a stick in the first two years. Next year, if you don’t get health insurance, you’d pay $95 or 1 percent of your income — a little less than you might pay for an iPod Nano. In 2015, you’d pay $325 or 2 percent of your income.

“Certainly, we are concerned that the penalty is just $95 in the first year, which is far below the cost of coverage,” Handelman said.

That’s why some insurers want HHS to give them more sticks.

America’s Health Insurance Plans, the main trade group for health insurance companies, has asked HHS to impose late enrollment fees, so people who don’t sign up until they need the coverage will pay more than people who enroll right away. It’s the same concept that Medicare uses now for doctors’ and prescription drug coverage: Seniors don’t have to enroll right when they turn 65, but if they wait too long, they pay a penalty when they do sign up — and their premiums will always be higher as a result.

The insurers have suggested other penalties for people who delay, such as not letting them choose the most generous health plans and allowing insurers to impose waiting periods.

The Blue Cross and Blue Shield Association is asking HHS for the late enrollment fees and penalties, too. The National Association of Health Underwriters, which represents health insurance agents and brokers, called for late enrollment penalties too, warning that the impact on premium costs would be “enormous” if too many people wait until they’re sick or injured to buy coverage.

And the American Academy of Actuaries — the people who crunch all the numbers for health insurers’ costs — suggested late enrollment penalties and other measures, like not letting people sign up for coverage as often and requiring small employers to sign their workers up automatically.

It’s all a critical part of the smooth launch of the exchanges — which, if all goes well, will be the health plan marketplace for people with pre-existing conditions, and for those who can’t get covered through another source, like their employers or Medicare.

“There’s broad agreement that in order for the exchanges and the insurance market reforms to work, the coverage needs to be affordable, and there needs to be as many healthy people in the risk pools as possible,” AHIP spokesman Robert Zirkelbach said.

Some of these ideas used to be discussed as lighter alternatives to the individual mandate, which Congress would have to pass to add them to the health care law. But now, these groups are asking HHS to impose the measures on its own, saying it has the power to keep the health insurance market stable in the first two years.

It’s also an acknowledgment that, with the toxic politics of a divided Congress and lasting Republican opposition to the health care law, the chance that Congress would pass any legislation to help Obamacare work better is pretty much zero.

“Ever since the beginning of this, we’ve been concerned about the strength of the mandate,” said Cori Uccello, a senior health fellow at the American Academy of Actuaries. “These same kinds of things can be used to strengthen the mandate. They don’t need to be seen as an either/or.”

HHS officials won’t say whether they’re actively considering the measures, but the department specifically asked for these suggestions when it put out its proposed rule on the health insurance market reforms in November. The rule asked for comments on “additional strategies consistent with the Affordable Care Act that [CMS] or states might deploy to avoid or minimize disruption of rates in the current market and encourage timely enrollment in coverage in 2014.”

Insurers say that line in the rule was an encouraging sign. “That’s an indication that they’re interested in ways to mitigate any problems,” Zirkelbach said.

The health insurers have a vested interest in asking for the extra measures, of course. They want as many customers as possible — which is one of the reasons they pushed for the individual mandate in the first place.

But even some health care experts who are sympathetic to the health care law acknowledge it’s not a sure thing that the mandate alone will attract the needed number of healthy people, especially in the first two years.

“I am somewhat worried since penalties are low,” said Jonathan Gruber, the MIT economist who consulted on both the federal and Massachusetts health reform laws. “I think additional measures would certainly help, but they should not be overly painful” to consumers, he said.

Not everyone is convinced that the health insurers need extra sticks, though.

“I’m not going to say there are no concerns. There’s some uncertainty involved,” said Linda Blumberg, a senior fellow at the Urban Institute’s Health Policy Center. But the law’s subsidies to help people buy coverage — which also start next year — should already make the coverage more attractive to young and healthy people, she said.

Several strategies built into the law, such as risk adjustment payments to help health plans that attract more than their share of sick people, do address the problems insurers are worried about, Blumberg said. And a strong outreach and enrollment campaign ahead of next year — stressing that generous coverage is available and people can get subsidies to help pay for it — should be more effective than adding new punishments for people who don’t sign up, she said.

“If you have a positive outreach campaign with the message, ‘Here they are, here are the exchanges, here’s affordable coverage, come and get it.’ Isn’t that more effective than, ‘Come and get it or we’re going to come get you?’” Blumberg asked.

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Analysts: ACA Will Drive Up Most Americans’ Insurance Premiums

The Institute for Policy Innovation’s Merrill Matthews and Mark Litow, past chairman of the Social Insurance Public Finance Section of the Society of Actuaries, in an op-ed for the Wall Street Journal Share to FacebookShare to Twitter (1/14, Matthews, Litow, Subscription Publication), titled, “ObamaCare’s Health-Insurance Sticker Shock,” predicts that Americans’ healthcare insurance premiums will spike this year due to the implementation of the Affordable Care Act. The authors point out that residents of the eight states that have rules similar to the ACA’s regarding how much more, if at all, insurers can charge policyholders with preexisting conditions, as well as which conditions must be covered at no extra expense to the policyholder, have seen their premiums rise more than residents in states with less regulated insurance markets. The authors note that analysts have concluded that residents of those states with the least expensive health insurance will face the biggest increases this year due to the ACA.

The Wall Street Journal Share to FacebookShare to Twitter (1/14, Subscription Publication), in an editorial explores President Obama’s meaning when, in the fiscal cliff talks with Speak Boehner, he asserted: “We don’t have a spending problem. We have a health-care problem.” The Journal contends that the President is acknowledging that the cost-control policies built into the ACA have failed to make the trajectory of anticipated future healthcare spending increases in the US any less steep than it had been before 2010.

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Guidance Issued on Health Insurance Exchanges

Guidance Issued on Exchanges, Medical Loss Ratio and Additional Medicare Taxes; Update on 11-20-2012 Guidance
On November 30, 2012, several Federal agencies released Proposed Rules on Patient Protection and Affordable Care Act (PPACA) provisions.
This alert provides highlights of these regulations as well as additional details about the regulations that were issued on November 20.
Notice of Benefit and Payment Parameters for 2014
Issued by HHS and the Centers for Medicare & Medicaid Services (CMS) on November 30. Comments are due 30 days from date of publication in the Federal Register, which is pending as of this writing.
The proposed rule provides additional details related to these topics. Brief summaries of each are provided below.
1.a. The medical loss ratio (MLR) program
1.b. Implementation of the federally facilitated Small Business Health Options Program (SHOP) Exchange
1.c. Exchange website disclosure/agents and brokers
1.d. User fees for insurers offering policies on the federally facilitated Exchange
1.e. The risk adjustment, reinsurance and risk-corridors programs (“3Rs”)
1.f. Cost-sharing reductions for low-income families purchasing coverage on the Exchange
1.g. Administration of advanced payments of the premium tax credit
1.h. Broker compensation in the federally facilitated Exchange
1.a. Change to MLR Timing Effective for 2014 Plan Years (applies to rebates paid in 2015)
  • Deadline for insurers to file their MLR report will move from June 1 to July 31.
  • Deadline for paying MLR rebates will move from August 1 to September 30.
  • Adjusted calculation rules to incorporate payments/receipts related to the 3Rs.
1.b. Implementation of the federally facilitated Small Business Health Options Program (SHOP) Exchange
The proposed rule includes details about employer choice, participation rates and contribution rates.
  • “Employer choice” model is only permitted when the employer makes all QHPs available at the level of coverage selected by the employer.
  • Minimum participation rate must be 70%.
  • Contribution rate: employers must use the specific method outlined in the proposed rule to determine contributions toward employee and dependent coverage.
1.c. Exchange Website Disclosure/Agents and Brokers
Agents or brokers who want to assist individuals or employers in enrolling in coverage through the federally facilitated Exchange or the SHOP Exchange for small businesses must complete registration and training before being listed on the Exchange website. State Exchanges may choose to limit whether they disclose information about licensed agents and brokers based on whether brokers/agents have completed any required Exchange or SHOP registration or training.
1.d. Federal Exchange User Fee
A Federally Facilitated Exchange (FFE) will operate in states that have chosen not to build their own Exchange. To help cover the administrative costs of the federal Exchange, HHS has proposed a user fee of 3.5% of Exchange-based monthly premiums for health insurers who want to offer policies on the federal Exchange.
1.e. Risk Adjustment, Reinsurance and Risk-Corridors Programs (“3Rs”)
These regulations describe the programs designed to mitigate adverse selection and help stabilize premiums in the individual and small group markets by providing payments to insurers with higher risk populations and assessments on insurers with lower-risk populations.
The regulations change the reinsurance assessment on insured and self-insured health plans from quarterly to annual and exempt the following types of plans:
  • Plans consisting solely of excepted benefits as defined in PHSA section 2791(c) (e.g., standalone dental and vision benefits, hospital indemnity and specified disease plans)
  • Private Medicare, Medicaid, CHIP, state and federal high-risk pools and basic health plans
  • Health Reimbursement Accounts (HRAs) integrated with a group health plan
  • Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs)
  • Employee assistance programs, disease management programs and wellness programs
  • Stop-loss and indemnity reinsurance policies
  • Military health benefits
  • Indian Health Service coverage
1.f. Cost-Sharing Reductions for Low-Income Families Purchasing Coverage on the Exchange
Cost-sharing reductions will be available to low and moderate-income individuals enrolled in certain subsidized plans on the individual Exchange. These cost-sharing reductions must be provided at the point-of-service.
1.g. Administration of Advanced Payments of the Premium Tax Credit
The proposed rule would require HHS to make advance payments of the premium tax credit to issuers on behalf of certain individuals. The proposed rule also outlines health insurance issuer responsibilities with respect to these advance payments.
1.h. Broker Compensation in a Federally Facilitated Exchange
A health plan must pay the same broker compensation for individual and small group plans offered through the federally facilitated Exchange as it pays for similar health plans offered in the state outside of the Exchange.
2. Establishment of the Multi-State Plan Program for the Exchange
Issued by the U.S. Office of Personnel Management on November 30. Comments are due 30 days from date of publication in the Federal Register, which is pending as of this writing.
This proposed rule defines the requirements for insurers that want to offer policies through the Exchanges in all states. It outlines the plans and benefits that must be offered as well as network adequacy requirements.
3. Additional Medicare Payroll Tax
Issued by the IRS on November 30. Comments are due 90 days from date of publication in the Federal Register, which is pending as of this writing.
Effective January 1, 2013, individuals with annual earnings of more than $200,000 and couples filing jointly with earnings of more than $250,000 will pay an additional Medicare payroll tax of .9% on earnings above these amounts.
Employers will need to begin withholding the additional Medicare tax once an employee’s 2013 earnings reach $200,000. If an employer deducts less than the required amount, the employer is liable until the employee pays the tax. Even after an employee pays the tax, the employer remains responsible for any penalties or additional taxes resulting from the failure to withhold as required.
The additional Medicare tax also applies to income from self-employment. Individuals are responsible for reporting and paying this tax even if their employer fails to withhold it (for example if a couple earns a total of more than $250,000 but neither of them earns $200,000 individually).
There is no additional Medicare payroll tax for employers.
On November 20, just before Thanksgiving, we issued a News Alert summarizing the guidance issued that day. We let you know that we were assessing the guidance and would get back to you with additional information as we completed our analyses.
The following provides additional information of particular interest to clients and brokers:
4. Health Insurance Market Rules and Rate Review
We have further clarified the impacts and timing:
  • Guaranteed Availability of Coverage and Guaranteed Renewability of Coverage apply to non-grandfathered individual and non-grandfathered group health plans the first plan/policy year beginning on or after 1/1/14.
  • Fair Health Insurance Premiums, Single Risk Pool and Rate Increase Disclosure and Review apply to non-grandfathered individual and small group plans the first plan/policy year beginning on or after 1/1/14.
  • Fair Health Insurance Premiums are effective 1/1/17 for the large group market, if coverage is available through an Exchange.
  • Enrollment in Catastrophic Plans applies to the individual market, effective 1/1/14.
Additional information about Guaranteed Availability of Coverage:
  • Issuers offering non-grandfathered plans are required to accept every individual or employer who applies for coverage.
  • Issuers must offer all products that are approved for sale. This includes non-grandfathered closed blocks of business.
  • Guarantee Issue Limitations – There are exceptions to the guarantee issue requirement that allow enrollment to be limited to: (a) open and special enrollment periods; (b) individuals or employees who live or work in the service area; (c) certain situations involving network and financial capacity; (d) small employers who satisfy the same contribution and participation requirements at issuance that the issuer is permitted to consider at renewal.
  • Open Enrollment
    • Group market: year round
    • Individual: periods consistent with those required by Exchanges for individual Qualified Health Plans (QHPs)
  • New Special Enrollment Period – There is a new 30 calendar day special enrollment period in both the individual and group markets in connection with the events that would trigger eligibility for COBRA coverage. This is in addition to existing special enrollment events for loss of eligibility for other coverage or dependent special enrollment.
  • New Marketing Standard – Prohibits marketing practices and plan benefit designs that discourage enrollment of individuals with significant health needs.
5. Essential Health Benefits, Actuarial Value and Accreditation
Further information about impacts:
Coverage offered by insurers and group health plans must meet a minimum value (MV) of 60%. Note: As of this writing, the MV calculator has not yet been released by the government.
The Actuarial Value (AV) calculator to be used for Qualified Health Plans (QHP) and individual and small group markets is now available to the public on the CCIIO website.
In addition, the proposed rule offered the following changes:
  • States can select or change their previously selected benchmark plan until the end of the Essential Health Benefits proposed rule comment period on 12/26/12.
  • “Pediatric services” is defined as services for individuals under the age of 19, but states can extend that definition beyond age 19.
  • If the benchmark plan does not provide coverage for pediatric oral and vision services, the benchmark will cover services from either the FEDVIP dental or vision plan with the largest enrollment, or the state CHIP plan.
  • PPACA rules limiting out-of-pocket amounts apply to QHPs and to the individual and small group market only. Limits on deductibles apply to the small group market only.
  • For Habilitative Services, if the benchmark plan does not include coverage of habilitative services, the state may determine which services are included in that category.
  • For Prescription Drugs, plans subject to the EHB requirements must cover the greater of (1) one drug in every United States Pharmacopeia (USP) category and class, or (2) the same number of prescription drugs in each category and class as the benchmark plan.
  • NCQA and URAC were recognized as accrediting entities for QHP certification.
6. Wellness Programs in Group Health Plans
Additional information about the Wellness Programs proposed rule:
  • Wellness programs are allowed for individual plans, but insurers in the individual market will not have specific guidance on the parameters for an acceptable wellness program.
  • Pilot state programs for the individual market are proposed in the law and the rules.
  • If a wellness program’s incentives affect eligibility, coverage or premium contribution levels, it will need further analysis to determine compliance with this proposed rule.

For more information on health insurance, the Colorado Health Benefit Exchange, and federal health reform, contact:

Group Insurance Analysts, Inc.  303-423-0162 ext 100, email  info, or visit our website a

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On the Horizon: Health Reform Changes for Fully Insured Small Group Employers

Employers will see an impact on the health coverage they

offer their employees as a result of some of the changes

under the Patient Protection and Affordable Care Act. This

brief summary covers several of the provisions and health

plan changes that have the greatest impact to employers.

In addition, the Affordable Care Act contains a number of

fees and taxes as well as product and benefit requirements

that will affect the cost of health care for employers during

the next several years. While the exact cost may differ for

each employer based on location and plan design offered, on

average employers are expected to see a substantial increase

in costs.


Overview of Taxes and Fees Affecting Employers


Patient-Centered Outcomes Research Institute Fee

(PCORI) – Beginning with plan years that end after

September 30, 2012, the Affordable Care Act imposes a

new fee on commercial health insurers and self-insured

plans. This fee is $1 per covered life for the first year,

$2 per covered life for the second year, and indexed to

medical inflation thereafter. The fee helps to fund research

on the comparative effectiveness of medical treatments

conducted by the new Patient-Centered Outcomes

Research Institute (PCORI).


Insurer Fee – Collected from insurers based on certain

net premium revenues for fully insured groups. The new

fee is expected to total $8 billion in 2014 for all insurers,

increasing to $14.3 billion in 2018, and increasing by the

rate of premium growth thereafter. Based on industry

estimates, the impact on premium is approximately 2.3%.


Transitional Reinsurance Fee – For years 2014 to

2016, the Affordable Care Act imposes a fee on insurers

to finance reinsurance payments for individual market

coverage. The fee will be assessed on a per capita basis.

It is estimated that these fees will total $12 billion in

2014, $8 billion in 2015 and $5 billion in 2016. States

are permitted to increase these fees at their discretion.

Based on industry estimates, the average projected cost is

approximately $6 per member/per month in 2014, which

then decreases each year for the subsequent two years.


Employer Mandates – Beginning in 2014 employers may

be subject to a non-deductible excise tax penalty if they do

not provide benefits to employees or if the benefit offering

does not equate to Minimum Essential Coverage offering.


Other Health Care Fees – The Affordable Care Act also

generates new revenue through:


• Annual fee on pharmaceutical manufacturers (2011) and

excise taxes on medical devices (2013) may increase claim

expenses to your plan.


• Excise tax imposed (40 percent) on the value of health

insurance benefits exceeding a specified threshold (2018).


Other Changes Affecting Small Group Employers


From 2012 through 2014 additional changes and impacts

to coverage and requirements will also affect small group

employers. Some of the more prominent include:


Summary of Benefits and Coverage (SBC) – By

September 23, 2012, UnitedHealthcare will provide

members with a concise, plain-language document

detailing information about the health plan’s benefits and

coverage, specific to the plans offered by the employer

to the member, including covered benefits, cost-sharing

provisions, coverage limitations and exceptions. In

addition, a new standardized health plan comparison tool

for individuals known as “coverage examples” must be

included, which illustrates the cost of care covered by the

plan for a few medical conditions. In addition, there are

specific requirements when these SBCs must be delivered.


Adjusted Community Rating and Market Restriction

Health insurance in the individual and small group markets

will only be able to vary premiums by family size, geography,

tobacco use and age. Other rating factors currently used

such as gender, industry, group size, health status and

medical history will be prohibited. The impact of age factors

will be limited to a range of 3 to 1. Tobacco users may also

have their premium varied by up to 50 percent higher than

non-tobacco users. As a result of these changes, a significant

number of employers will realize more substantial increases

than under current requirements.



Fully Insured Small Group Employers


Minimum Essential Coverage – PPACA does not explicitly

mandate an employer to offer employees acceptable health

insurance. However, certain employers with at least 50 full-time

equivalent employees will face penalties, beginning in 2014, if

one or more of their full-time employees obtains premium tax

credit through an exchange. An individual may be eligible for

a premium credit either because the employer does not offer

coverage or if the employer offers coverage that is either not

“affordable” or does not provide Minimum Essential Coverage

(MEC). An employer-sponsored plan that satisfies the

Affordable Care Act’s reform requirements must:


• Be affordable to the employee (premium may not exceed 9.5

percent of household income)


• Provide minimum value, which is at least 60 percent of the

total allowed cost of benefits.


Employers will need to evaluate their offerings to determine

whether they meet these minimum value requirements; if they do

not, they will need to evaluate alternative plan options and/or the

impact of paying assessments.


Essential Health Benefits (EHB) No limits – Beginning in

2014, small group employers are required to provide Essential

Health Benefits.


Prohibition of Pre-existing Condition Exclusions for All Ages

Beginning in 2014, pre-existing condition exclusions must be

removed for all members, not just those under age 19.


Other Benefit Requirements – Employers will need to adjust

plan design and offerings based on rules going into effect in

2012 through 2014.


• Beginning August 2012, preventive benefits will be expanded

for a number of services for women including additional

screening, prenatal office visits, breast-feeding support and

some contraceptives.


• Beginning in 2013, employee salary reduction contributions to

health FSAs will be limited to $2,500 per year, with indexed

increases allowed in future years to adjust for inflation.


• Beginning 2014, plan design deductibles may not exceed a

$2,000 (self-only) or $4,000 (other than self-only) annual

limitation provided under the Affordable Care Act.


• Beginning 2014, the out-of-pocket maximums for all plans will

be capped at the same level at which HSA plans are capped. In

2013, these levels are $6,250 for single coverage and $12,500

for non-single coverage.


• Beginning 2014, all cost-sharing toward services including flatdollar

copays that are defined as Essential Health Benefits must

accumulate to a plan’s out-of-pocket maximum.


• Beginning March 2013, employers must provide written notice

to current and new employees at the time of hire to inform

them of the exchanges and the circumstances under which an

employee may be eligible for a premium tax credit and a cost

sharing reduction.


• Beginning October 2014 plans meeting the definition of a

controlling health plan (CHP) will be required to obtain a

health plan identifier.


For more information on group health insurance for Colorado, contact Group Insurance Analysts, Inc at 888-423-3232 ext 100 or visit You can also email us at


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Health Reform Subsidy Calculator – A New Online Tool

Click Here for the online tool.

This tool illustrates premiums and government assistance under the health reform law signed by the President. Beginning in 2014, tax credits will be available for people under age 65 who purchase coverage on their own in a health insurance Exchange and are not covered through their employer, Medicare or Medicaid. The tool allows the user to examine the impact at different income levels, ages, family sizes, and regional costs.

Premium calculations are consistent with estimates of premiums under reform prepared by the Congressional Budget Office. CBO projects that average premiums under reform for the same level of coverage for a given group of enrollees would be 7-10% lower than under the status quo. However, in many cases coverage will be more comprehensive and accessible than what is typically available today in the non-group market. As a result, 2014 premiums in the calculator cannot necessarily be compared to what people buying insurance on their own are paying in 2010.

The calculator does not apply to people with coverage available through an employer, where the firm is generally paying for a substantial portion of the insurance premium.

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