Page 28

Birmingham Bar Association Bulletin - Fall 2013

Healthcare Law any cost-sharing requirements such as copayments, coinsurance or deductibles. In addition to the general preventive services, it requires expansion of the preventive health services for women under the Preventive Care Schedule. These expanded benefits include well-woman visits; gestational diabetes screening; Human Papillomavirus (HPV) DNA testing; sexuallytransmitted infection (STI) counseling; HIV screening and counseling; contraception and contraceptive counseling; breastfeeding support, supplies and counseling; and interpersonal and domestic violence screening and counseling. Coverage for Adult Children Prior to January 1, 2014, grandfathered plans were not required to offer coverage to adult children that were eligible for health insurance through their own employer. Beginning January 1, 2014, grandfathered plans will no longer be allowed to exclude adult children who have coverage available through their employer. Essential Health Benefits For the small group and individual markets, ACA creates an essential health benefits package that provides a specific comprehensive set of services. Essential health benefits generally include items and services within the following categories: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic condition management; and pediatric services, including oral and vision care. Nongrandfathered, fully insured individual and small group health plans must cover all 10 categories of essential health benefits. In addition, the ACA requires that there be no annual dollar limits on essential health benefits. These limits started to phase out beginning in 2011 and will be completely phased out by 2014. Selfinsured plans are not required to include “essential health benefits;” however, if they do, they are prohibited from having annual dollar limits on the coverage. Prohibition on Excessive Waiting Periods The ACA prohibits group health plans and employers from imposing excessive waiting periods before an individual is eligible for coverage under the plan. A waiting period is considered “excessive” if it exceeds 90 calendar days — ACA means 90 days and not 3 months. Prohibition on Pre- Existing Conditions Beginning in 2014, group health plans and insurance issuers offering health insurance coverage will be prohibited from excluding anyone from coverage due to a preexisting health condition. Furthermore, issuers will be limited in the amount they can vary premium rates due to health status, gender or other factors. Issuers will be permitted to have premium rate variances based on age (not to exceed 3 to 1), geography, family size and tobacco use. Administrative Mandates (varying effective dates between 2012 and 2014) Medical Loss Ratio (“MLR”) Rebates ACA requires insurers to meet minimum MLR standards — 85% and 80% respectively for large group and small group/individual policy business. A MLR is the percentage of insurance premium dollars spent on reimbursement for clinical services or activities to improve health care quality. If a state-regulated insurer fails to meet the minimums, the insurer is required to issue rebates to plan sponsors which are then passed along to participants. The Summary of Benefits and Coverage (“SBC”) The SBC is a new disclosure requirement under the ACA. The SBC requirement is in addition to the summary plan description requirement for ERISA plans. The purpose of the SBC is to help consumers more easily understand their insurance benefits. The health care reform law requires all health plan sponsors to provide SBCs to participants for the 2013 plan year. Employers must distribute SBCs at annual re-enrollment, to new hires or newly eligible employees, after qualifying events, at the introduction of a new plan option, upon request and when plan benefits materially change (in addition to the summary of material modifications). SBCs must be distributed in hard copy, though in some cases they may be distributed electronically or made available online. Non-discrimination Prior to the enactment of the ACA, self-funded group health plans were prohibited from discriminating in favor of certain highly compensated individuals with respect to eligibility requirements and benefits. ACA extended this prohibition to the fully-insured market. While a failure in the self-insured market means that all of the benefits would become taxable to the highly compensated individual, failure to satisfy the fully-insured nondiscrimination requirements could trigger excise taxes of $100 per day per person discriminated against. The Department of Labor, Treasury Department, and 28 Birmingham Bar Association


Birmingham Bar Association Bulletin - Fall 2013
To see the actual publication please follow the link above