Whether fully insured or self-insured, unions must implement the same provisions as other grandfathered plans for plan years beginning on or after September 23, 2010. However, fully insured plans get some special treatment in the interim final grandfathering rules. The following allowances are given to collectively bargained agreements (for the life of the agreement) that were ratified before March 23, 2010:

• The plans may change carriers and remain grandfathered.
• The plans may make benefit plan changes (such as plan design) or change employer/employee organization contribution amounts and remain grandfathered.
• The interim final rules on grandfathering are silent as to whether grandfathered health insurance coverage is exempt from the anti-abuse rules.

When the last of the collectively bargained agreements expires, the special allowances end as well. From that point on, the grandfathered status of fully insured plans will be determined as it is for any other health plan.

Self-funded plans that are kept as collectively bargained agreements are treated like any other plan. For self-funded plans, whether or not they are kept as collectively bargained agreements, a change in third-party administrators will not result in the loss of grandfathered status.

If a group customer requests that we implement health care reform changes earlier or later than its renewal date because its ERISA plan year differs from the renewal date, we will honor the request.

60-day notice of plan changes

Another health care reform law provision requires plans to create a uniform summary of benefits. And any material modifications to the terms of the plan must be communicated to members 60 days before those changes go into effect. Based on our review, we believe that the 60-day notice provision will not go into effect right away; however, it must be implemented before March 23, 2012 (two years after the law was enacted). The U.S. Department of Health and Human Services will be giving us more guidance on this provision. When it does, we will let you know.

No discrimination based on compensation

Benefits cannot be based on wages

The health care reform law notes that, effective September 23, 2010, plans may not discriminate in favor of highly compensated employees. This means that group health plans cannot base eligibility or the level of benefits on an employee’s wage. The group can offer different levels of benefits as long as they comply with ERISA and are not tied to the amount an employee makes. The legislation defines a highly compensated employee is someone who is:

• One of the five highest paid officers.
• A shareholder who owns more than 10% in value of the employer’s stock.
• Among the highest paid 25% of all employees (exceptions apply).

Waiting periods

We do not believe we will need to change our approach to allowing groups to offer different waiting periods to different employee levels. The health care reform law “nondiscrimination by compensation” provision is specific to the benefit offerings of a medical plan and not the waiting periods established by a company.

Grandfathered vs. non-grandfathered plans

No matter how a plan is structured, in order for it to be a grandfathered plan, it must have been in effect when the health care reform law was passed on March 23, 2010, and no changes are made to the benefits or the benefit plan. For non-grandfathered plans, the plan sponsor of a group health plan (other than a self-insured plan) may not set up rules about health insurance coverage eligibility (including continued eligibility) for any full-time employees based on the total hourly or annual salary of the employees. Nor can the sponsor set up rules that in any way favor employees who receive more compensation.

Offering benefits only to currently eligible employees

A group can retain grandfathering status by continuing to offer benefits only to currently eligible employees (instead of all employees), as long as the benefits are not tied to how much those employees make. In addition, the health care reform law notes that the plan sponsor of a group health plan (other than a self-insured plan) may not set up rules about health insurance coverage eligibility (including continued eligibility) for any full-time employees based on the total hourly or annual salary of the employees. Nor can the sponsor set up rules that in any way favor employees who receive more compensation.

Executive physicals

Because this health care reform law provision is specific to plans and not to benefits, executive physicals (and similar benefits) are not affected.

For 10/1/10 and later effective dates, Aetna will discontinue new business sales of child-only policies to applicants (under the age of 19) for Aetna Advantage Plans for Individuals, Families and the Self Employed. No existing policyholders are affected by this action.

Effective immediately, any applications received requesting a child-only policy with a 10/1/10 effective date (or later) will be closed. Underwriting will notify applicants by mail of their ineligibility, but also provide options for coverage – see below.

Why is Aetna making this change?
This change positions Aetna for the future so they can effectively handle upcoming changes resulting from healthcare reform (i.e. they are likely to lose money on child-only coverage). New federal rules require guaranteed issue (GI) of coverage for individuals under the age of 19 and no corresponding coverage requirement. These conditions have the potential to significantly increase the cost of premiums and make coverage unaffordable.

No impact to existing child-only policies
Existing policyholders will not be impacted by this action and they may continue their current coverage. These policies are renewable

States affected
Discontinuation of child-only coverage for the following states AK, AR, AZ, CA, CO, DC, DE, FL, GA, IL, IN, KS, KY, LA, MI, MO, MS, NC, NE, NV, PA, SC, TN, TX, VA, WV, and WY will occur on 10/1/10. The implementation date for the following states CT, MD, OH, and OK is still being established.

Other health insurance options available for individuals under age 19

• Be added as a dependent to a parent’s plan.
• If the above option is not a viable solution, applicants can check www.healthcare.gov for alternatives

Aetna continues to explore options with states where they are ceasing the sales of new child-only policies, including reviewing other regulatory changes that may allow them to re-enter this market and provide a valuable product between now and 2014, but this is highly unlikely.

Tags: Aetna Child Policies, Aetna Children Coverage, Aetna Discontinues Child Only Policies

The temporary health benefits continuation subsidy helped some involuntarily terminated workers but came nowhere close to providing “universal coverage.”

Researchers at the Urban Institute, Washington, give that assessment in a review of the 65% federal COBRA group health continuation premium subsidy that Congress included in the in the American Recovery and Reinvestment Act (ARRA) of 2009. The subsidy expired May 31.

Before the subsidy took effect, workers had to pay 102% of the full cost of employer-sponsored health coverage to continue benefits. Now that the subsidy has expired, workers must once again pay 102% of the cost, rather than 35%.

The Urban Institute researchers say estimates of the effects of the COBRA subsidy on COBRA take-up rates vary, with Ceridian Corp., Minneapolis – a firm that manages benefits programs for a wide range of employers – reporting that take-up rates at client employers had increased to about 18%, from about 12%.

“Most of the before-and-after take-up rates presented above likely underestimate ARRA’s effects on its target population of job losers because they do not compare the same types of people before and after ARRA.

Enrollment figures from one benefits firm suggest that workers who signed up for COBRA when the subsidy was available might have been somewhat healthier than the workers who sign up for unsubsidized COBRA coverage, the researchers say.

The researchers found that federal efforts to promote the program were effective and that implementation seemed to go reasonably well, under the circumstances.

But the fact that studying the effects of the ARRA COBRA subsidy is so difficult suggests that implementing the Affordable Care Act, the health system change act that includes the Patient Protection and Affordable Care Act, might be more difficult than policymakers had expected, the researchers warn.

The COBRA subsidy program experience suggests that the secretary of the U.S. Department of Health and Human Services may have difficulty getting large amounts of new types of insurance information from employers and health benefits administrators, unless employers or administrators already are generating the data for private business purposes, the researchers say.

“Careful attention to the costs and benefits of new data requests or requirements should be paid in implementation, as it would be easy to create considerable political ‘push back’ for data elements that are not vital to effective early oversight of health plans,” the researchers say.

The COBRA subsidy program also has shown that policymakers will have to arrange for very high subsidies and very easy enrollment to enroll all or nearly all newly unemployed people, the researchers say.

“Interviewees from all perspectives agreed that even subsidized COBRA premiums are too high to help a great many potential enrollees,” the researchers say.

Even paying 35% of the full cost of health coverage is too much for many, the researchers say.

Encouraging high coverage continuation rates can help insurers as well as unemployed individuals, by minimizing the possible effects of adverse selection, the researchers say.

Tags: COBRA Subsidy Expiration, COBRA Subsidy Reviews