Healthcare Reform Act: Understanding the Provisions Already in Effect

The Patient Protection and Affordable Care Act (PPACA) was signed into law on March 23, 2010. Since then, the government has issued many pages of guidance on how to interpret the law. Implementation of some provisions have been delayed until the government can issue further guidance, so there continues to be uncertainty about the full impact of this historic legislation.

The uncertainty has intensified recently due to the November 2010 election, which changed control of the House of Representatives. The first order of business in the House appears to be an effort to repeal PPACA.

Since it is unclear what the future of PPACA will be, this article will focus on the provisions that have already gone into effect, and how group health plans will be changing in 2011.

Some of the main provisions of Health Care Reform, or HCR, as those of us in an industry with a fascination for acronyms are now calling it, were effective six months from the date President Obama signed the bill, or September 23, 2010. The provisions apply to group health plans, as well as health insurance companies offering group and individual health insurance coverage, on the first day of the plan year beginning on or after September 23, 2010. Therefore, employers with group health plans that renewed on from October 1, 2010 – January 1, 2011, are already subject to the provisions.

The first question an employer will need to answer in determining which of the main provisions apply to its health plan is whether the health plan can be considered “grandfathered” under the rules of HCR. A grandfathered plan is one that was in existence on March 23, 2010. In addition, the regulations specify the plan design changes made after March 23^rd which would result in a plan losing its grandfathered status.

There are restrictions on any increase to the cost-sharing (coinsurance) percentage employees are required to pay for health services, as well as limited allowable increases to deductibles and copayments and amounts that employees are required to contribute for health premiums.

Being grandfathered, however, does not exempt a plan from many of the HCR provisions. And the grandfather exemption lasts only as long as the plan complies with regulations governing the allowable plan changes.

Following are the main provisions of HCR that were effective September 23, 2010, and an indication of whether they apply to grandfathered plans:

1. Health plan coverage for dependent children. Dependent children, up to the age of 26, are eligible for coverage without regard to residency or marital, student or financial status. A grandfathered plan is subject to this provision; however, a grandfathered plan may deny eligibility for a dependent who is eligible to enroll in their own employer-sponsored group plan.
2. Preventive Care. Certain preventive services must be covered without charging a deductible, copayment or coinsurance when provided by a network provider. The types of preventive services covered are those with a rating of A or B in the current recommendations of the United States Preventive Services Task Force. Grandfathered plans are not subject to this provision.
3. Lifetime Limits. There can be no lifetime limits on essential health benefits. Grandfathered plans are subject to this provision.
4. Pre-existing Condition Exclusion. There can be no pre-existing condition exclusion applied to children under the age of 19. The law calls for the elimination of all pre-existing condition exclusions in 2014. Grandfathered plans are subject to this provision.
5. New Internal Claims Appeals and External Review Procedures. PPACA requires group health plans and health insurance issuers offering group or individual health insurance coverage to implement an effective internal claims and appeals process for the determination of benefit claims, and also requires the establishment of state and federal external review processes to review benefit claim denials.

One additional provision of HCR that was effective on January 1, 2011 is the elimination of reimbursements for non-prescribed over-the-counter (OTC) drugs through health care flexible spending accounts or health savings accounts.

It is very unlikely the provisions listed above will be reversed, even if repeal efforts are successful. The most uncertainty surrounds the individual and employer mandates, which are scheduled to go into effect in 2014. Stay tuned as we see how many of the original provisions of PPACA are implemented in the years ahead.

For more information, please contact:

Ramona Fiumara

VP & COO - Seitlin Benefits

Tel:  954.903.1622

Email:  rfiumara@seitlin.com