Federal agencies are rushing young adult dependent coverage interim final rules into effect without going through the usual comment period.

The Employee Benefits Security Administration, an arm of the U.S. Department of Labor, has posted a preliminary version of the interim final rules on its website.

The Internal Revenue Service, an arm of the U.S. Treasury Department, and the Office of Consumer Information and Insurance Oversight at the U.S. Department of Health and Human Services also worked on the rules.

The agencies are set to publish the final version of the interim rules in the Federal Register Thursday.

The rules implement a provision in the new federal Affordable Care Act — the legislative package that includes the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act — that requires insurers to let insured parents keep children on the parents’ health coverage until the children are 26.

The ACA young adult coverage provision is set to take effect Sept. 23, but most major carriers say they will implement the provision earlier.

Federal agencies normally provide time for members of the public to comment before implementing major regulations. The agencies are implementing the young adult coverage interim rules before the comments come in because the secretary of Labor, HHS and the Treasury “have determined that it would be impracticable and contrary to the public interest to delay putting the provisions in these interim final regulations in place,” officials write in a preamble to the interim rules. “Having a binding rule in effect is critical to ensuring that individuals entitled to the new protections being implemented have these protections uniformly applied.”

Officials are estimating that, in 2011, the program will lead to about 1.2 million young adults having new health coverage, and that about 650,000 of those young adults will be people who were previously uninsured.

The number of uninsured young adults who gain coverage through the program in 2011 could range from 200,000 to about 1.6 million, officials estimate.

Although officials use the term “dependent” in connection with the regulation, group health plans can no longer use factors such as whether a child of an insured is a tax dependent in deciding whether to issue coverage to that child, officials write.

“Examples of factors that cannot be used for defining dependent for purposes of eligibility (or continued eligibility) include financial dependency on the participant or primary subscriber (or any other person), residency with the participant or primary subscriber (or any other person), student status, employment, eligibility for other coverage, or any combination of these,” officials write.

Implementing the young adult coverage program will require that the children who were denied coverage, or whose coverage ended, receive alerts about the new enrollment opportunity, officials write.

Federal agencies want to hear ideas about ways to minimize the burden on the notice senders and on the individuals who must fill out the notices, officials write.

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Tags: Dependent Care Regulations, Dependent Health Insurance to Age 26 Update, Health Insurance Dependent Care Law Regulation, Insurance Age 26 Law

nsurance and employer groups are talking about the lack of cost control provisions in H.R. 3590, the Patient Protection and Affordable Care Act bill, which passed by a 219-212 vote at 10:48 p.m. Sunday in the House.

H.R. 3590 is the same bill that the Senate passed early on Christmas Eve a few months back, and it now is awaiting the signature of President Obama.

House members also voted 220-211 at 11:36 p.m. to pass H.R. 4872, the Reconciliation Act of 2010. The Senate still must approve that bill, but it would revise and extend many provisions of H.R. 3590. Senate leaders have told House leaders that they have the votes to pass H.R. 4872 using a special budget reconciliation process.

Under normal Senate rules, bills need 60 votes to pass. Budget reconciliation measures need just 51 votes.

Some Republican lawmakers said during floor debate that they or colleagues would try to block implementation of H.R. 3590 — and of H.R. 4872, if H.R. 4872 becomes law — by turning to the courts for relief.

H.R. 3590 and H.R. 4872 passed with no Republican support; 34 Democrats voted against H.R. 3590, and 33 voted against H.R. 4872.

Democrats were jubilant about winning the H.R. 3590 battle and getting H.R. 4872 to the Senate.

“This is what change looks like,” Obama said during an appearance shortly after the vote on H.R. 3590 took place.

“I know this wasn’t an easy vote for a lot of people,” Obama said. “But it was the right vote.”

House Majority Leader Steny Hoyer, D-Md., smiled at the reporters at a press conference on Capitol Hill. “For all of you who pursued all of us: We had the votes,” Hoyer said.

Insurance say they still have concerns the current versions of the bills.

“The access expansions are a significant step forward” Karen Ignagni, president of America’s Health Insurance Plans, Washington, says in a statement about the health bills. “But this legislation will exacerbate the health care costs crisis facing many working families and small businesses.”

The bill “does little to stem the skyrocketing cost of health care and will be financed on the backs of small business during one of the most delicate financial periods in American history,” says Robert Rusbuldt, president of the Independent Insurance Agents and Brokers of America, Alexandria, Va..

WHAT’S IN H.R. 3590?

H.R. 3590 — the PPACA bill that the Senate passed late on Christmas Eve — is on track to become law whether or not the Senate approves H.R. 4872.

The final version of H.R. 3590 would:

- Enact the Community Living Assistance Services and Supports Act long long term care benefits program.

- Require insurers selling in the individual market, in the small group market and through the exchange system to sell coverage on a guaranteed issue and guaranteed renewable basis. Plans could base rating variations only on age, family use, tobacco use and location, and the rates for the oldest insureds could be only 3 times higher than the rates for the youngest insureds. Rates for tobacco users could be only 50% higher than the rates for non-tobacco users.

- Create a new health insurance exchange system that individuals and employers with up to 100 employees could use to buy subsidized health coverage, and 4 “tiers” of coverage, ranging from catastrophic plans to platinum plans.

- Create a new system of nonprofit health insurance co-ops.

- Permit states to form multi-state health insurance compacts, to create multi-state markets for health insurance.

- Create a health insurance tax credit for employers with 25 or fewer employees and average annual wages of less than $50,000.

- Impose penalties on employers with more than 50 employees that fail to provide health coverage and on inidividuals with incomes over a minimum income threshold who fail to have health coverage.

- Require employers with more than 200 employees to enroll employees in health plans automatically.

- Impose a $750 per-employee penalty on employers with more than 50 employees that fail to provide health coverage.

- Impose minimum medical loss ratios that are similar to those in H.R. 3590: 85% for group plans with more than 100 participants; 80% for small group plans; and 85% for Medicare Advantage plans.

- Impose a 40% “Cadillac plan” excise tax on insurers that sell relatively expensive health plans. Insurers now would pay the tax when they sold plans that cost more than $8,500 for individuals and $23,000 for families.

- Tighten health savings account and flexible savings account reimbursement rules. Individuals could not use account funds to pay for over-the-counter medications unless the medications were prescribed by doctors.

- Cap annual FSA contributions at $2,500, but increase the limit annually by a cost of living adjustment, starting Jan. 1, 2011.

- Apply the existing Medicare payroll tax to investment income starting in 2013, and increase the tax by 0.9 percentage points, to 2.35%, for wages over $200,000 per year for individuals and over $250,000 per year for couples.

- Adopt a national standard for eligibility verification and claims status by Jan. 1, 2013; a standard for electronic fund transfers by Jan. 1, 2014); and a variety of other standards by Jan. 1, 2016.

- Give states 5-year grants to develop medical malpractice reform programs.

WHAT’S IN H.R. 4872?

Originally, the Reconciliation Act was going to include health insurance rate regulation provisions. The version passed Sunday by the House excludes that version, because the Senate parliamentarian ruled that H.R. 4872 backers could not handle the provision using the budget reconciliation process.

H.R. 4872 echoes the language of H.R. 3590 in many places and changes it in others.

Provisions that are still in H.R. 4872 would:

- Create a $1 billion Health Insurance Reform Implementation Fund.

- Exempt the first 30 employees of any employer from the no-coverage penalty.

- Increase the per-employee penalty imposed on employers that fail to provide health coverage to $2,000 per employee, from $750.

- Require individuals making more than $200,000 per year and couples making more than $250,000 per to pay a new 3.8% tax on interest, dividends, capital gains and other investment income. (This new tax is higher than the 2.9% tax on investment income recently proposed by President Obama.)

- Increase the Cadillac plan tax limits to $10,200 for individuals and $27,500 for families, and to $11,850 and $30,950 for for retirees and high-risk professionals. Calculations of health benefits value now will exclude dental plans and stand-alone vision plans.- Push the effective date of the $2,500 cap on annual FSA contributions back to Jan. 1, 2013.

- Increase the no-coverage penalty for individuals with relatively high incomes and decrease the penalty for low-income individuals.

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Tags: Health Care Bill H.R. 3590, Health Care Legislation, House Health Care Bill, House of Representives Passes Health Care Bill

President Obama Tuesday night signed into law legislation that provides a stopgap, 31-day extension of federal subsidies of COBRA health care premiums.

The measure was approved earlier Tuesday by the Senate on a 78-19 vote, while the House cleared it last week.

Under H.R. 4691, the 65%, 15-month premium subsidy for laid-off workers is extended to those involuntarily terminated from March 1 through March 31.

Without the extension, employees laid off after Feb. 28 would have been ineligible for the subsidy.

The measure also will allow employees to receive the subsidy if they first lost group coverage due to a reduction in hours and then were terminated after enactment of the legislation, if certain conditions are met.

Meanwhile, the Senate Wednesday will continue consideration of legislation, H.R. 4213, that would extend the premium subsidy to employees laid off through Dec. 31, 2010.

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Tags: 2010 COBRA Benefits, 2010 COBRA Benefits Extension, 2010 COBRA Subsidy Deadline, 65% COBRA Subsidy Extension, COBRA Extentension, COBRA Health Care Premium Subsidy Deadline, COBRA Subsidy Extension

President Obama has signed a bill that extends federal COBRA health insurance premium subsidies for the unemployed.

The Senate, in a rare Saturday session, passed H.R. 3326 on an 88-10 vote. The measure—a military spending bill that the House passed earlier last week—includes a provision that extends the nine-month, 65% premium federal subsidy by six months. The change applies to those who are involuntarily terminated through Feb. 28, 2010.

Previously, employees who lose their jobs after Dec. 31 would have been ineligible for the subsidy.

The legislation also provides another six months of subsidized coverage for beneficiaries whose nine-month COBRA premium subsidy has run out.

In addition, the legislation gives beneficiaries whose subsidy expired and who didn’t pay the full premium the opportunity to receive retroactive coverage. For example, a beneficiary whose nine months of subsidized coverage ran out Nov. 30 and who didn’t pay the unsubsidized premium for December could pay his or her 35% share in January and receive COBRA coverage for December.

The legislation also requires employers to notify current and future COBRA beneficiaries of the new 15-month premium subsidy.

The fate of the legislation has been followed closely by terminated workers—eager to know whether the subsidy will be extended—as well as employers who need to tell beneficiaries the COBRA premium they should pay.

The legislation makes clear that employers can offset future COBRA premiums or issue refund checks for beneficiaries who overpaid their COBRA premium. That could happen if a beneficiary whose subsidy ran out in November paid the full premium rather than the 35% share in December.

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Tags: COBRA Legislation Extension, COBRA stimulus, COBRA stimulus package, COBRA subsidy, COBRA Subsidy Expansion, COBRA Subsidy Extended, COBRA Subsidy Extension, Obama COBRA Subsidy

As we head into July, the federal debate has become more defined as four of the five Congressional committees with jurisdiction over health reform have released draft health reform bills. On June 19th , the Education and Labor, Energy and Commerce, and Ways and Means Committees in the House of Representatives released a joint tri-committee draft health reform bill. Earlier in June, the Senate Health, Education, Labor, and Pensions (HELP) Committee released its health reform bill. The final committee with jurisdiction over health reform, the Senate Finance Committee, is expected to release its health reform bill soon after the 4th of July Congressional recess. House and Senate leadership hope to pass legislation in their respective chambers before August and get a final compromise bill to the President in October. Key components of the recently released House tri-committee bill include:

National Health Insurance Exchange: By 2013, a National Health Insurance Exchange is to be established to replace the current individual health insurance market and provide an option for employers and public program enrollees in Medicaid and the Children’s Health Insurance Program (CHIP). States would be allowed to apply to the federal government to establish state or regional exchanges. The Exchange is to establish health plan standards, facilitate the provision of comparative information, enrollment, billing, and other administrative functions, administer coverage subsidies, and respond to consumer grievances.

Public Plan: No later than 2013, the Department of Health and Human Services is to develop and offer a Public Plan through the Exchange to compete with private insurers. The Public Plan is to comply with the same requirements as other private health plans participating in the Exchange, but provider payments from the Public Plan are to be similar to Medicare rates and providers participating in Medicare would be required to participate in the Public Plan for five years. The federal government would provide start up funding for the Public Plan, but it must become self-sustaining after initial start up.

Insurance Market Reform: The legislation requires changes to the individual and group markets that prohibit pre-existing condition exclusions, prohibit premium rating based on health status, gender, or occupation and limit rating by age, require guarantee issue and renewal of coverage, require a medical loss ratio of 85 percent, prohibit annual or lifetime benefit limits and limit annual cost sharing, establish a Benefits Advisory Committee to recommend a minimum benefit package and three additional standard benefit plans, and establish a risk spreading mechanism to minimize unequal risk selection in health plans.

Coverage Mandates: By 2013, all individuals would be required to have health insurance coverage. Those not complying with the mandate are to be assessed a tax up to the cost of the minimum benefit plan. Exceptions to the mandate are granted for religious objection and financial hardship. Employers would be required to provide 72.5 percent for single coverage and 65 percent for family coverage of the lowest cost minimum benefit set plan or pay an eight percent tax on wages. Certain small businesses with payroll below a set level would be exempt.

Coverage Subsidies: Sliding scale subsidies varying by income would be available through the Exchange for individuals and families with incomes below 400 percent of the federal poverty level ($88,000 for a family of four) so that premiums would not exceed 10 percent of income. Sliding scale subsidies varying by employee income and employer size worth up to 50 percent of premium would be available to employers with less than 25 employees whose average wage is below $40,000.

Medicaid Reform: The legislation expands Medicaid eligibility for all individuals to 133 percent of the federal poverty level ($14,000 for an individual) and requires an 85 percent medical loss ratio for Medicaid managed care organizations. It also establishes new preventive services benefits, increases payments for primary care, and implements a medical home pilot project to reduce costs and improve outcomes through use of preventive services and care coordination.

Medicare Reform: The legislation restructures provider payment rates and requires the Department of Health and Human Services to develop new payment methods to promote coordinated care and reward quality and efficiency in areas such as hospital readmissions, post-acute care, imaging, and primary care. The bill reduces payment rates and establishes an 85 percent medical loss ratio for Medicare Advantage plans. The legislation also eliminates the coverage gap (donut hole) in Part D by 2023 and reauthorizes Special Needs Plans (SNPs) that integrate care for beneficiaries with coverage through Medicaid and Medicare.

Other Health System Reforms: The legislation also makes investments in the health care workforce to improve access to primary care, makes investments in prevention and public health programs, establishes national centers for quality improvement and comparative effectiveness research, establishes mechanisms to simplify administrative functions, and enhances efforts to reduce fraud, waste, and abuse.

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Tags: House Health Committee bill, House Health Subcomittee, House insurance bill, House of representative insurance proposal

The House and Senate have approved a compromise budget resolution that sets parameters for spending and revenue legislation. As requested by the President, the budget resolution includes a reserve fund for health care reform initiatives that must be deficit-neutral for fiscal years 2009 through 2014 or fiscal years 2009 through 2019. The resolution allows Medicare physician payment legislation, that would likely prevent cuts to physician payment rates for two years, to be exempt from the deficit-neutral requirement.

The budget resolution also allows for the ability to consider health care reform legislation under the reconciliation process. Reconciliation is a procedure that Congress may use to make it easier to pass budget bills related to tax and entitlement spending programs. A reconciliation bill can not be filibustered as debate is limited to 20 hours, and this allows a bill to be passed quickly with a simple majority vote.

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Tags: Health care reform, health care reform agreement

I used to respect Rush Limbaugh, but he’s turned into a babbling shock jock that will say anything for ratings.

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Tags: Limbaugh on health care, Rush Limbaugh and Ted Kennedy, Rush Limbaugh health care

The Department of Labor says it is working on guidance regarding the newly created subsidy for COBRA premiums.

The American Recovery and Reinvestment Act of 2009 (ARRA) provides for a 65 percent subsidy for COBRA continuation premiums for up to 9 months for workers who have been involuntarily terminated, and for their families.

The subsidy terminates when the covered individual is offered any new employer-sponsored healthcare coverage or becomes eligible for Medicare. Workers who were involuntarily terminated on or after September 1, 2008, and before February 17, 2009, but failed to initially elect federal COBRA continuation coverage, have an additional 60 days to elect federal COBRA and receive the subsidy.

To qualify for the subsidy, individuals must meet all of the following requirements:

• Is eligible for COBRA continuation coverage at any time during the period beginning September 1, 2008 and ending December 31, 2009;
• Elects COBRA coverage (when first offered or during the additional election period), and
• Has a qualifying event for COBRA coverage that is the employee’s involuntary termination during the period beginning September 1, 2008 and ending December 31, 2009.

The ARRA provides that an assistance-eligible individual (AEI) is treated as having paid the full premium required for COBRA continuation coverage for a coverage period if the individual pays 35 percent of the premium. The subsidy program is effective for the first coverage period beginning on or after February 17, 2009. In most cases (plans with calendar month coverage periods), this will be March 1, 2009.

The legislation requires that information on the COBRA subsidy be included in COBRA notices. Under the legislation, the Department of Labor must create a model notice within 30 days of February 17, 2009.

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Tags: COBRA Recovery and Reinvestment Act laws, COBRA subsidy

The American Recovery and Reinvestment Act of 2009 signed into law February 17 expands COBRA in ways that will certainly impact employers. Most significantly, the act offers assistance-eligible individuals a 65 percent subsidy of their required COBRA premiums and an additional enrollment period within which to elect COBRA coverage.

Under the provision, the federal government will provide the subsidy for up to nine months for workers who lose health coverage as a result of being involuntarily terminated between September 1, 2008 and December 31, 2009 and who are eligible for COBRA coverage benefits, and their dependents.

The COBRA subsidy becomes applicable March 1. Assistance-eligible workers will receive a notice within 60 days of enactment that will outline the steps and requirements necessary to get the subsidy. We are awaiting government requirements for the forms and notices. These requirements are expected by mid-March. COBRA participants should pay their March premium as invoiced, and an adjustment will be made and the adjusted premium will be invoiced for future payments. The 65 percent subsidy will be applied retroactively, if applicable, from March 1.

Plan sponsors of all group health plans, multi-employer plans (and federal plans subject to comparable) COBRA laws will bear the brunt of administering the new provisions and will need to work closely with their COBRA administrators to ensure compliance. In addition, groups under 20 employees will also have responsibilities because the new subsidy is applicable to small groups and church plans covered by comparable state continuation laws.

On February 20, 2009, the Internal Revenue Service released a revised Form 941, the form for employers’ quarterly tax return on which employers report payroll taxes. Instructions for Form 941 were also revised. See lines 12, 12a, and 13 of Form 941 and pages 1, 2, and 6 of the instructions for directions for reporting credits to recover COBRA premium subsidies.

The Employee Benefit Security Administration (EBSA), the part of the Department of Labor (DOL) that administers federal labor laws regulating employee retirement and health plans, recently unveiled a Web site dedicated to the COBRA premium subsidy. No guidance is posted on the site yet, but it is anticipated that DOL guidance will be posted to the site as it is released.

The Department of Labor is required by H.R. 1 to conduct expedited reviews of denials of premium assistance (§ 3001(a)(5)). The Web site states that “The Department is currently developing a process and an official application form that will be required to be completed for appeals.”

The Web site also says that “EBSA is actively working to issue additional guidance regarding the COBRA premium reductions.” The Department of Labor is also responsible for developing a model notice for use by employers (§ 3001(a)(7)(D)) and outreach consisting of public education and enrollment assistance (§ 3001(a)(9)).

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Tags: American Recovery And Reinvestment Act Of 2009, Employer COBRA Stimulus, Employers and American Recovery and Reinvestment Act of 2009

The U.S. House and Senate will vote on a compromise $790 billion stimulus package that includes subsidies for 65% of the COBRA health insurance premiums paid by laid-off workers, under a hard-fought conference report unveiled late Feb. 12.

The final version of the American Recovery and Reinvestment Act, which followed intense negotiations between leaders of the two chambers, is smaller than either the $819 billion stimulus passed by the House or the $838 billion package cleared by the Senate. Completion of the conference report for H.R. 1 sets up a planned Feb. 13 House vote, with the Senate to move the package either later in the day or over the President’s Day weekend. Following the vote, Congress will stand in recess until Feb. 23.

The final COBRA provisions, which were welcomed by the health insurance industry, are more generous than the 50% subsidy in the Senate version, but do not last as long as the 12-month subsidy included in both prior versions of the bill. Estimated to cost $24.7 billion, the provision would provide aid to an estimated 7 million involuntarily terminated between Sept. 1, 2008 and Dec. 31, 2009 to pay continue paying health insurance premiums through the 23-year-old Consolidated Omnibus Budget Reconciliation Act program.

COBRA allows employees who are terminated or leave their jobs voluntarily to remain in their former employer’s group health plan for up to 18 months, which can be extended to 36 months for those with extenuating life circumstances. Employers are permitted to charge COBRA enrollees up to 102% of the true cost of group health premiums, which average more than $1,000 per month.

According to the final report, the aid would be available for up to nine months, or until the terminated worker receives an offer of any new employer-sponsored health care coverage or becomes eligible for Medicare. Subsidies would not be available to those who earn more than $125,000 a year, or $250,000 per household.

The final version also strips out a provision opposed by the National Business Group on Health, which represents large employers, that would have allowed beneficiaries older than age 55 and those who have worked for the same employer for a decade to retain COBRA coverage until they become eligible for Medicare.

The measure also includes $17.2 billion in funding for health information technology infrastructure and an additional $2 billion in affiliated grants and loans. The bill sets a goal of seeing 90% of doctors and 70% of hospitals adopt electronic health records within the next decade, but it couples that with more stringent regulations on the transmission of identifiable health information. Insurers have protested that the bill’s notification requirements for security breaches were broadly worded, that it authorizing state attorneys general to enforce federal privacy standards and that new regulations could restrict health promotion, disease management and care coordination programs.

However, groups such as the Blue Cross Blue Shield Association and America’s Health Insurance Plans welcomed $1.1 billion in new funding for comparative effectiveness research. The BCBSA has proposed creation of an industry-funded institute to offer recommendations on the most effective and cost-efficient medical treatments.

“With comparative effectiveness, patients and providers will be able to assess drugs, technologies, and treatment options and make decisions that best reflect the patients’ needs and preferences,” AHIP President Karen Ignagni said in a statement. “We applaud efforts to address this important priority in the current economic recovery bills.”

The final package mostly eliminates a $54 billion provision, seen as potentially beneficial particularly to financial guaranty and mortgage guaranty insurers, that would have allowed corporations to carry back net operating losses for 2008 and 2009 against taxes paid in the prior five years. The final version offers a much more limited, $947 million carryback open only to businesses with gross receipts of less than $15 million, which could potentially be helpful to some agencies and small carriers.

Other small business tax provisions of potential benefit to agencies include $41 million to allow a one-time write-off of up to $125,000 in capital expenses; $829 million for raising the small business stock sale capital gains exclusion to 75% from 50%; and $415 million to temporarily reduce the built-in gains holding period for S corporations from 10 years to seven years.

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Tags: COBRA, COBRA laws, COBRA legislation, COBRA stimulus package, COBRA subsidy