Carter's Benefits

eNewsletter Volume 3, Issue 7 July 2010

First, let me start by saying that we respect your right to privacy. If you wish not to be included in these electronic mailings or would like more information, please reply to this email. If you would like to remain on the list, simply do nothing but wait for the next mailing.

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Happy July 4th 2010

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Recent News

We are starting to see rules and regulations from the March 23, 2010 Patient Protection and Affordable Care Act or PPACA. This month you will notice the 6 of the 12 articles all reference PPACA and regulations that are now forming to govern this legislation. I think the most important topic is the ending of COBRA Subsidies our first article this month.

But first, here is a graph showing the results of a survey by Hewitt and Associates.


  1. Cobra Subsidies End
  2. PPACA: Fact Sheet: The Affordable Care Act’s New Patient’s Bill of Rights
  3. PPACA: Agencies release Core Regulations
  4. PPACA: Agencies Set Rules for Grandfathered Plans
  5. PPACA: Administration Unveils New Rules for Employer-Sponsored Plans
  6. PPACA: Administration Aims To Enroll All Eligible Children In CHIP By 2015
  7. PPACA: Small Business Resource - A List of Tax Credits
  8. MetLife: How to leverage wellness programs 
  9. More Employers Conducting Dependent Audits
  10. More Doctors Boosting Revenue By Charging Fees For Services Not Covered by Insurance
  11. The Key to Successful Health Care reform: " Medical Care Cost Containment"
  12. Growing Number Of Physicians Limiting New Medicare Patients
Cobra Subsidies End

The eligibility period for the federal COBRA health care premium subsidies under the American Recovery and Reinvestment Act of 2009 (ARRA) ended on May 31, 2010.

Congressional support for a fourth extension of the COBRA subsidy eligibility period has diminished over the past few weeks, as lawmakers continue to shift their focus to fiscal responsibility.

Individuals who were involuntarily laid off on or after June 1 are not eligible to receive the 65 percent COBRA premium subsidy and will have to bear the full cost of their COBRA coverage if they elect it. Those assistance-eligible individuals who are already receiving the premium reduction, and are eligible to continue to receive the subsidy for up to 15 months, are not affected.

Although there has been voiced support for providing further financial aid to help involuntarily terminated workers continue their health care coverage, many party leaders feel there’s not enough backing in Congress to pass another COBRA extension.

Some Congressional leaders have even considered reducing the tax subsidy or shortening the 15-month coverage period to make the provision less expensive.

“Forced to make budget choices by their newfound concern about government spending, it looks like Congressional democrats and their union allies favor an extension of unemployment insurance and aid to states to pay teachers over an extension of the COBRA subsidy,” said Jim O’Connell, Ceridian’s legislative affairs consultant.

Congress has extended the COBRA subsidy for unemployed workers three times since February 2009, when it was passed as a provision within ARRA.

Although short term extensions, long term extensions and changes in the percentage amount of the subsidy have all been suggested by Congressional members, support seems to be eroding.

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Fact Sheet: The Affordable Care Act’s New Patient’s Bill of Rights

June 22, 2010

A major goal of the Affordable Care Act – the health insurance reform legislation President Obama signed into law on March 23 – is to put American consumers back in charge of their health coverage and care. Insurance companies often leave patients without coverage when they need it the most, causing them to put off needed care, compromising their health and driving up the cost of care when they get it. Too often, insurance companies put insurance company bureaucrats between you and your doctor. The Affordable Care Act cracks down on the some of the most egregious practices of the insurance industry while providing the stability and the flexibility that families and businesses need to make the choices that work best for them.

Today, the Departments of Health and Human Services (HHS), Labor, and Treasury issued regulations to implement a new Patient’s Bill of Rights under the Affordable Care Act – which will help children (and eventually all Americans) with pre-existing conditions gain coverage and keep it, protect all Americans’ choice of doctors and end lifetime limits on the care consumers may receive. These new protections apply to nearly all health insurance plans.1

How These New Rules Will Help You

  • Stop insurance companies from limiting the care you need. For most plans starting on or after September 23, these rules stop insurance companies from imposing pre-existing condition exclusions on your children; prohibit insurers from rescinding or taking away your coverage based on an unintentional mistake on an application; ban insurers from setting lifetime limits on your coverage; and restrict their use of annual limits on coverage.
  • Remove insurance company barriers between you and your doctor. For plans starting on or after September 23, these rules ensure that you can choose the primary care doctor or pediatrician you want from your plan’s provider network, and that you can see an OB-GYN without needing a referral. Insurance companies will not be able to require you to get prior approval before seeking emergency care at a hospital outside your plan’s network. These protections apply to health plans that are not grandfathered.

Builds On Other Affordable Care Act Policies

These new protections complement other parts of the Affordable Care Act including:

  • Reviewing Insurers’ Premium Increases. HHS recently offered States $51 million in grant funding to strengthen review of insurance premiums. Annual premium hikes can put insurance out of reach of many working families and small employers. These grants are a down-payment that enable States to act now on reviewing, disclosing, and preventing unreasonable rate hikes. Already, a number of States, including California, New York, Maine, Pennsylvania and others are moving forward to improve their oversight and require more transparency of insurance companies’ requests to raise rates.
  • Getting the Most from Your Premium Dollars. Beginning in January, the Affordable Care Act requires individual and small group insurers to spend at least 80% and large group insurers to spend at least 85% of your premium dollars on direct medical care and efforts to improve the quality of care you receive – and rebate you the difference if they fall short. This will limit spending on overhead and salaries and bonuses paid to insurance company executives and provide new transparency into how your dollars are spent. Insurers will be required to publicly disclose their rates on a new national consumer website –
  • Keeping Young Adults Covered. Starting September 23, children under 26 will be allowed to stay on their parent’s family policy, or be added to it. Group health plans that are grandfathered plans can limit this option to adult children that don’t have another offer of employment-based coverage.  Many insurance companies and employers have agreed to implement this program early, to avoid a gap in coverage for new college graduates and other young adults.
  • Providing Affordable Coverage to Americans without Insurance due to Pre-existing Conditions: Starting July 1, Americans locked out of the insurance market because of a pre-existing condition can begin enrolling in the Pre-existing Condition Insurance Plan (PCIP). This program offers insurance without medical underwriting to people who have been unable to get it because of a preexisting condition. It ends in 2014, when the ban on insurers refusing to cover adults with pre-existing conditions goes into effect and individuals will have affordable choices through Exchanges – the same choices as members of Congress.

New Consumer Protections Starting As Early As This Fall

The new Patient’s Bill of Rights regulations detail a set of protections that apply to health coverage starting on or after September 23, 2010, six months after the enactment of the Affordable Care Act. They are:

  • No Pre-Existing Condition Exclusions for Children Under Age 19. Each year, thousands of children who were either born with or develop a costly medical condition are denied coverage by insurers. Research has shown that, compared to those with insurance, children who are uninsured are less likely to get critical preventive care including immunizations and well-baby checkups. That leaves them twice as likely to miss school and at much greater risk of hospitalization for avoidable conditions.
    • A Texas insurance company denied coverage for a baby born with a heart defect that required surgery. Friends and neighbors rallied around the family to raise the thousands of dollars needed to pay for the surgery and put pressure on the insurer to pay for the needed treatment. A week later the insurer backed off and covered the baby.2

The new regulations will prohibit insurance plans from denying coverage to children based on a pre-existing conditions. This ban includes both benefit limitations (e.g., an insurer or employer health plan refusing to pay for chemotherapy for a child with cancer because the child had the cancer before getting insurance) and outright coverage denials (e.g., when the insurer refuses to offer a policy to the family for the child because of the child’s pre-existing medical condition). These protections will apply to all types of insurance except for individual policies that are “grandfathered,” and will be extended to Americans of all ages starting in 2014.

  • No Arbitrary Rescissions of Insurance Coverage. Right now, insurance companies are able to retroactively cancel your policy when you become sick, if you or your employer made an unintentional mistake on your paperwork.
    • In Los Angeles, a woman undergoing chemotherapy had her coverage cancelled by an insurer who insisted her cancer existed before she bought coverage. She faced more than $129,000 in medical bills and was forced to stop chemotherapy for several months after her insurance was rescinded.3

Under the regulations, insurers and plans will be prohibited from rescinding coverage – for individuals or groups of people – except in cases involving fraud or an intentional misrepresentation of material facts. Insurers and plans seeking to rescind coverage must provide at least 30 days advance notice to give people time to appeal. There are no exceptions to this policy.

  • No Lifetime Limits on Coverage. Millions of Americans who suffer from costly medical conditions are in danger of having their health insurance coverage vanish when the costs of their treatment hit lifetime limits set by their insurers and plans. These limits can cause the loss of coverage at the very moment when patients need it most. Over 100 million Americans have health coverage that imposes such lifetime limits.
    • A teenager was diagnosed with an aggressive form of leukemia requiring chemotherapy and a stay in the intensive care unit. He reached his family’s plan’s $1 million lifetime limit in less than a year. His parents had to turn to the public for help when the hospital informed them it needed either $600,000 in certified insurance or a $500,000 deposit to perform the bone marrow transplant he needed.4

The regulation released today prohibits the use of lifetime limits in all health plans and insurance policies issued or renewed on or after September 23, 2010.

  • Restricted Annual Dollar Limits on Coverage. Even more aggressive than lifetime limits are annual dollar limits on what an insurance company will pay for health care. Annual dollar limits are less common than lifetime limits, involving 8 percent of large employer plans, 14 percent of small employer plans, and 19 percent of individual market plans. But for people with medical costs that hit these limits, the consequences can be devastating.
    • One study found that 10 percent of cancer patients reached a limit of what insurance would pay for treatment – and a quarter of families of cancer patients used up all or most of their savings on treatment.5

The rules will phase out the use of annual dollar limits over the next three years until 2014 when the Affordable Care Act bans them for most plans. Plans issued or renewed beginning September 23, 2010, will be allowed to set annual limits no lower than $750,000. This minimum limit will be raised to $1.25 million beginning September 23, 2011, and to $2 million beginning on September 23, 2012. These limits apply to all employer plans and all new individual market plans. For plans issued or renewed beginning January 1, 2014, all annual dollar limits on coverage of essential health benefits will be prohibited

Employers and insurers that want to delay complying with these rules will have to win permission from the Federal government by demonstrating that their current annual limits are necessary to prevent a significant loss of coverage or increase in premiums. Limited benefit insurance plans – which are often used by employers to provide benefits to part-time workers — are examples of insurers that might seek this kind of delay. These restricted annual dollar limits apply to all insurance plans except for individual market plans that are grandfathered.

  • Protecting Your Choice of Doctors. Being able to choose and keep your doctor is a key principle of the Affordable Care Act, and one that is highly valued by Americans. People who have a regular primary care provider are more than twice as likely to receive recommended preventive care; are less likely to be hospitalized; are more satisfied with the health care system, and have lower costs. Yet, insurance companies don’t always make it easy to see the provider you choose. One survey found that three-fourths of OB-GYNs reported that patients needed to return to their primary care physicians for permission to get follow-up care.

The new rules make clear that health plan members are free to designate any available participating primary care provider as their provider. The rules allow parents to choose any available participating pediatrician to be their children’s primary care provider. And, they prohibit insurers and employer plans from requiring a referral for obstetrical or gynecological (OB-GYN) care. All of these provisions will improve people’s access to needed preventive and routine care, which has been shown to improve the health of those treated and avoid unnecessary health care costs. These policies apply to all individual market and group health insurance plans except those that are grandfathered.

  • Removing Insurance Company Barriers to Emergency Department Services. Some insurers will only pay for health care provided by a limited number or network of providers – including emergency health care. Others require prior approval before receiving emergency care at hospitals outside of their networks. This could mean financial hardship if you get sick or injured when you are away from home or not near a network hospital.

The new rules make emergency services more accessible to consumers. Health plans and insurers will not be able to charge higher cost-sharing (copayments or coinsurance) for emergency services that are obtained out of a plan’s network. The rules also set requirements on how health plans should reimburse out-of-network providers. This policy applies to all individual market and group health plans except those that are grandfathered.

Benefits of Consumer Protections

The new rules will bring immediate relief to many Americans and provide peace of mind to millions more who are only one illness or accident away from medical and financial chaos.

The new ban on lifetime limits would affect group premiums by 0.5% or less and individual market premiums by 0.75% or less. The restricted annual limit policy would affect group and individual markets by roughly 0.1% or less (grandfathered individual market plans are exempt). And, the prohibition of preexisting conditions exclusions for children would affect group health plans by just a few hundredths of a percent. For new plans in the individual market, this impact would be roughly 0.5% in many states. In states with community rating, (roughly twenty states), the impact could be up to 1.0%. These costs are before taking into account benefits.

In addition, the rules will achieve greater cost savings by:

  • Reducing the“hidden tax” on insured Americans: By making sure insurance covers people who are most at risk, there will be less uncompensated care and the amount of cost shifting among those who have coverage today will be reduced by up to $1 billion in 2013.
  • Improving Americans’ health: By making sure that high-risk individuals have insurance, the rules will reduce premature deaths.6 Insured children are less likely to experience avoidable hospital stays than uninsured children7 and, when hospitalized, insured children are at less risk of dying.8
  • Protecting Americans’ savings: High medical costs contribute to some degree to about half of the more than 500,000 personal bankruptcies in the U.S. in 2007.9 These costs borne by individuals might be assumed by insurance companies once rescissions are banned, annual limits are restricted, lifetime limits are prohibited, and most children have access to health insurance without pre-existing condition exclusions.
  • Enhancing workers’ productivity: Making sure that kids with health problems have coverage will reduce the number of days parents have to take off from work to care for family members. Parents will also be freed from “job lock,” which occurs when people are afraid to take a better job because they might lose coverage for themselves or their families.10 

1 Limits on pre-existing conditions and annual limits will not apply to existing “grandfathered” plans offering individual coverage. For details, see the Fact Sheet and interim final regulations released on the topic on June 14.
2 Jarvis, Jan, “Under Fire, Blue Cross Blue Shield of Texas Offers to Cover Medical Expenses for Crowley Baby,” Houston Star-Telegram, (March 31, 2010).
3 Girion, Lisa “Health Net Ordered to Pay $9 million after Canceling Cancer Patient’s Policy,” Los Angeles Times (2008), available at:,1,5039339.story.
4 Murphy, Tom. “Patients struggle with lifetime health insurance benefit caps,” Los Angeles Times, July 2008.
5 See “National Survey of Households Affected by Cancer.” (2006) accessed at
6 See, for example, Almond, Doyle, Kowalski, Williams (2010), Doyle (2005), and Currie and Gruber (1996).
7 Keane, Christopher et al. “The Impact of Children’s Health Insurance Program by Age.” Pediatrics 104:5 (1999), available at:
8 Bernstein, Jill et al. “How Does Insurance Coverage Improve Health Outcomes?” Mathematica Policy Research (2010), available:
9 David Himmelstein et al, 2009.
10 Gruber, J. and B. Madrian. “Health Insurance, Labor Supply, and Job Mobility: A Critical Review of the Literature

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PPACA: Agencies Release Core Regulations

The Obama administration has unveiled interim final regulations it will use to implement the rescission, preexisting condition exclusion, benefits maximum and patient protection provisions in the new federal health laws.

The Internal Revenue Service, an arm of the U.S. Treasury Department, and the Employee Benefits Security Administration, an arm of the U.S. Labor Department, worked to put out the 196-page batch of interim final rules and guidance together with the new Office of Consumer Information and Insurance Oversight (OCIIO), an arm of the U.S. Department of Health and Human Services.

The Affordable Care Act (PPACA) – the legislative package that includes the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act – created the OCIIO, and it also created the rescission provisions and other provisions that led to the development of the interim final rules.

The IRS also is proposing to adopt the same batch of rules as permanent regulations.

Final drafts of the interim final rules and the IRS notice of proposed rule making are now available on the Office of the Federal Register website.

The rules are due to appear in the Federal Register June 28. Agencies sometimes change documents between the time they appear on the Federal Register office website and the time they officially appear in the Federal Register.

Comments on the interim final rules will be due 60 days after the day of official publication in the Federal Register, and comments on the IRS proposed rules will be due 90 days after the publication date.

Many of the group plan and group insurance rules will apply for plan years beginning on or after Sept. 23, and others will apply for plan years beginning on or after Jan. 1, 2014.

Similarly, many of the rules that affect individual health insurance will apply for policy years beginning on or after Sept. 23, and some will apply for policy years beginning on or after Jan. 1, 2014.

Some PPACA opponents hope to keep many of its provisions from taking effect by fighting the new requirements in court. The American Center for Law and Justice, Atlanta, has filed a suit against implementation in the U.S. District Court in the District of Columbia.


The PPACA provisions banning lifetime benefits caps will take effect Sept. 23, and provisions restricting use of annual caps will take effect that same date. A ban on annual benefits caps is set to take effect Jan. 1, 2014.

Grandfathered individual policies are exempted from this provision, officials note.

“The statute provides that, with respect to benefits that are not essential health benefits, a plan or issuer may impose annual or lifetime per-individual dollar limits on specific covered benefits,” officials say.

The regulations describing “essential health benefits” have not been issued, officials say.

“For plan years (in the individual market, policy years) beginning before the issuance of regulations defining ‘essential health benefits,’ for purposes of enforcement, the Departments will take into account good faith efforts to comply with a reasonable interpretation of the term ‘essential health benefits,’” officials say. “For this purpose, a plan or issuer must apply the definition of essential health benefits consistently. For example, a plan could not both apply a lifetime limit to a particular benefit – thus taking the position that it was not an essential health benefit – and at the same time treat that particular benefit as an essential health benefit for purposes of applying the restricted annual limit.”

Between Sept. 23 and Jan. 2014, group plans and individual health insurers can “establish a restricted annual limit on the dollar value of essential health benefits,” officials say.

To avoid the possibility of big premium increases, federal agencies will phase the annual limits in over 3 years.

Starting Sept. 23, the annual limits must be at least $750,000. The minimum annual limit will increase to $1.25 million Sept. 23, 2011, and to $2 million Sept. 23, 2012.

The new PPACA annual maximum rules do not apply to health savings accounts or to health reimbursement arrangements, officials say.


The federal agencies are making special allowances for limited benefit “mini med plans.”

To keep members of those plans from suffering a severe impact, “these interim final regulations provide for the secretary of Health and Human Services to establish a program under which the requirements relating to restricted annual limits may be waived if compliance with these interim final regulations would result in a significant decrease in access to benefits or a significant increase in premiums,” officials say.

HHS officials will put out limited-benefit plan guidance “in the near future,” officials say.


The PPACA preexisting conditions exclusions provisions will prohibit group plans and individual issuers from imposing preexisting condition exclusions after Jan. 1, 2014; those provisions take effect for enrollees under age 19 for plan years beginning on or after Sept. 23.

Until the PPACA provisions take effect, the rules included in the Health Insurance Portability and Accountability Act (HIPAA) of 1996 continue to apply, officials say in a preamble to the proposed regulations.

“These interim final regulations do not change the HIPAA rule that an exclusion of benefits for a condition under a plan or policy is not a preexisting condition exclusion if the exclusion applies regardless of when the condition arose relative to the effective date of coverage,” officials say.


PPACA bans on group health plan and individual health policy rescissions, except in cases involving fraud or intentional misrepresentation of a material fact, are set to take effect Sept. 23.

Under the current standard, carriers can rescind coverage in cases involving unintentional misrepresentations of material facts, officials say.

The new PPACA rescission standard “applies to all rescissions, whether in the group or individual insurance market, and whether insured or self-insured coverage,” officials say. “These rules also apply regardless of any contestability period that may otherwise apply.”

Starting with policy years beginning on or after Jan. 1, 2014, PPACA provisions will ban health carrier discrimination based on health status, and those changes “will reduce the likelihood of rescissions,” officials predict.

State anti-rescission laws apply if the state laws are tougher than the federal standard, officials say.


Some PPACA provisions require health plans to give enrollees easier access to certain types of providers, such as gynecologists, and in-network-level emergency services, without imposing prior authorization requirements.

“The emergency services must be provided without regard to any other term or condition of the plan or health insurance coverage other than the exclusion or coordination of benefits, an affiliation or waiting period … or applicable cost-sharing requirements,” officials say.


President Obama said today in the White House that he has just spoken to the chief executive officers of some of the largest U.S. health carriers and some state insurance commissioners to talk about implementing the PPACA provisions.

A year ago, everyone, including insurers recognized “that finally something needed to be done about America’s broken health care system,” Obama said, according to a written version of his remarks. “One thing was clear to everybody: We couldn’t keep traveling down the same road.”

The new PPACA regulations and the rest of the health system change process is “not punitive,” Obama said. “It’s not meant to punish insurance companies. They provide a critical service. They employ large numbers of Americans.  And in fact, once this reform is fully implemented a few years from now, America’s private insurance companies have the opportunity to prosper from the opportunity to compete for tens of millions of new customers. We want them to take advantage of that competition.”

But consumers need protection from problems with the current system, such as discrimination against children with preexisting conditions and efforts to rescind policies issued to women with breast cancer, Obama said.

“I’m pleased to say that some insurance companies have already stopped these practices,” Obama said.

Some have “questioned whether insurance companies might find a loophole in the new law and continue to discriminate against children with preexisting conditions,” Obama said. “And to their credit, when we called the insurance companies to provide coverage to our most vulnerable Americans, the industry agreed. Those were the right things to do for their consumers, their customers -- the American people. And I applaud industry for that.  And we’re going to hold industry to that standard, a standard in which industry can still thrive but Americans are getting a fair shake.”

Similarly, some insurers have tried to increase rates a great deal before new restrictions take effect, but at least one carrier withdrew a large rate increase when asked about it, Obama said.

“There are genuine cost-drivers that are not caused by insurance companies,” Obama said.

But “we’ve got to make sure that this new law is not being used as an excuse to simply drive up costs,” Obama said. “So what we do is make sure that the Affordable Care Act gives us new tools to promote competition, transparency and better deals for consumers. The CEOs here today need to know that they’re going to be required to publicly justify unreasonable premium increases on your websites, as well as the law’s new website -- As we set up the exchanges, we’ll be watching closely, and we’ll fully support states if they exercise their review authority to keep excessively expensive plans out of their insurance exchanges.”

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Agencies Set Rules For Grandfathered Plans

The Affordable Care Act gives American families and businesses more control over their health care by providing greater benefits and protections for family members and employees.  It also provides the stability, and also the flexibility, that families and businesses need to make the choices that work best for them.   

During the health reform debate, President Obama made clear to Americans that “if you like your health plan, you can keep it.”  He emphasized that there is nothing in the new law that would force them to change plans or doctors. Today, the Departments of Health and Human Services, Labor, and Treasury issued a new regulation for health coverage in place on March 23, 2010 that makes good on that promise by: 

  • Protecting the ability of individuals and businesses to keep their current plan;
  • Providing important consumer protections that give Americans – rather than insurance companies – control over their own health care.  
  • Providing stability and flexibility to insurers and businesses that offer insurance coverage as the nation transitions to a more competitive marketplace in 2014 where businesses and consumers will have more affordable choices through Exchanges. 

The rule announced today preserves the ability of the American people to keep their current plan if they like it, while providing new benefits, by minimizing market disruption and putting us on a glide path toward the competitive, patient-centered market of the future.  While it requires all health plans to provide important new benefits to consumers, it allows plans that existed on March 23, 2010 to innovate and contain costs by allowing insurers and employers to make routine changes without losing grandfather status.  Plans will lose their “grandfather” status if they choose to significantly cut benefits or increase out-of-pocket spending for consumers – and consumers in plans that make such changes will gain new consumer protections.

Most of the 133 million Americans with employer-sponsored health insurance through large employers will maintain the coverage they have today.  Large employer-based plans already offer most of the comprehensive benefits and consumer protections that the Affordable Care Act will provide to all Americans this year – such as preventing lifetime limits on coverage – and in the future.

People who work in smaller firms – which change insurers more often due to annual fluctuations in premiums – and people who purchase their own insurance in the individual market– a group that frequently changes coverage – will enjoy all of the benefits of the Affordable Care Act when they choose a new plan.  These Americans also will benefit from the new competitive Exchanges that will be established in 2014 to offer individuals and workers in small businesses with greater choice of plans at more affordable rates – the same choice of plans as members of Congress. Click here to read more

Additional Reading:
The U.S. Treasury Department, the U.S. Labor Department and the U.S. Department of Health and Human Services have described the requirements for “grandfathered health plans” in a draft of interim final rules developed to implement PPACA provisions that affect group health plans. .

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Administration Unveils New Rules For Employer-Sponsored Plans

The Los Angeles Times (6/15) reports, "The Obama administration Monday announced new regulations to discourage companies from scaling back their health benefits, a goal Democrats described as a top priority of the new healthcare law. These rules may have a profound effect on the health coverage that more than 160 million Americans get from an employer."

        The Washington Post (6/15, Hilzenrath, Aizenman) reports, "If you like your health plan, you can keep it. That's what President Obama promised during the long months of debate over health-care reform," and the new rules issued on Monday are meant "to fulfill that promise." The Post adds, "The administration estimates that many plans will end up changing, prompting Republicans to accuse the president of breaking his word."

        According to the AP (6/15, Alonso-Zaldivar), "The Obama administration had a message Monday for employers who want to keep federal bureaucrats from rewriting the rules for their company medical plans: Don't jack up costs for workers, and you won't have to worry about interference from the new health care law." HHS Secretary Kathleen Sebelius, who made the announcement, said, "What we don't want is a massive shift of costs to employees." The AP points out that this "new regulation that spells out how health plans that predate the health overhaul law can avoid its full impact."

        For instance, the "regulations empower the administration to revoke the so-called grandfather status of businesses that shift 'significant' new burdens onto employees -- a considerable penalty that would subject those plans to all the consumer protections in the Democrats' new healthcare reform law," The Hill (6/15, Lillis) notes. Under these new rules, Sebelius said, "employers can make 'routine and modest' adjustments to their premium, deductible and co-pay requirements," although "'significant' cost hikes or benefit cuts would cost them their exempted status. The goal is to ensure that grandfathered plans 'don't use this additional flexibility to take advantage of their customers,'" she added.

        Kaiser Health News (6/15, Galewitz, Carey) reports, "Business groups gave mixed reviews Monday to new Obama administration rules limiting how much employers and insurers can change their health insurance plans -- while remaining exempt from potentially costly new consumer protections." Notably, "consumer groups praised the regulations, saying the rules would ensure that millions of Americans receive the full benefits of the new health-overhaul law." In contrast, "business groups that opposed the enactment of the health overhaul law denounced the regulation." Randel K. Johnson, a senior vice president at the U.S. Chamber of Commerce, stated, "Once grandfathered status is lost, employers will be forced to follow a number of expensive new insurance rules -- which will increase costs for employers and employees, threatening the coverage Americans currently have."

        Reuters (6/15, Charles) notes that investors and analysts are paying close attention to these new rules, as well as to the others being issued as health reform is being implemented, in order to determine their impact on the health insurance industry. The USA Today (6/15, Kiely) "The Oval" blog also covers the story.

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Administration Aims To Enroll All Eligible Children In CHIP By 2015

USA Today /Kaiser Health News (6/16, Galewitz) reports, "The Obama administration wants all eligible children signed up" for CHIP "by 2015. So far, the federal government has handed out $40 million in grants for enrollment initiatives, and $80 million more is on the way." But, "many health experts say it will take a major campaign by government, health facilities and non-profit groups to get people signed up." Cindy Mann, "the top Medicaid official" at HHS, "says the efforts to find and enroll uninsured children now will help show what works best -- from low-tech labors such as knocking on doors to more sophisticated approaches using government databases or social media to find uninsured kids."

Remember, as an employer you are now required to provide notice to all employees annually. We do this for our clients as a free service to ensure compliance. Here is a link to our March 2010 eNewsletter where we first discussed this requirement.

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Small Business Resource - A List of Tax Credits

The Internal Revenue Service has released a new summary of tax credits created by recent legislation that impact small businesses, including the new PPACA small business health insurance premium tax credit and the federal COBRA subsidies. The new summary Web page consolidates many of the IRS’ tax credit resources in one convenient location. “Because some of these changes are only available this year,” the IRS states, “eligible businesses only have a few months to take action and save on their taxes.”

In related news, many small businesses are taking issue with some of the fine print requirements that make it difficult for them to qualify for the small business health insurance premium tax credit program. In particular, there is confusion about language that prohibits business owners from counting employees who are also family members when calculating their credit. 

In early April, the Obama administration sent a mailing to millions of small business owners promoting the PPACA federal tax credit worth up to 35% of what the company spends on health insurance for its workers, which is retroactive back to January 1 of this year. To qualify, businesses must have fewer than the equivalent of 25 full-time employees, have average annual wages of $50,000 or less, and cover at least 50% of the cost of health care for their workers. But what the promotional flyer and the White House fact sheet on the credit does not make clear is that that the credit can’t reimburse premiums paid for family members in family-owned businesses.  

This requirement, which was designed to prevent fraud, only appears in a frequently asked questions section of a recently released IRS bulletin on the credit. It states that a family member of a business owner or the owner’s partner is not considered an employee for “the purposes of this credit.  

The prohibition on including the cost of even an extended family member’s premium if they are an employee will significantly reduce the credit’s value to many small employers, as it is extremely common  for them to employ one or more relatives. The bulletin defines a family member as a child (or descendant of a child), a sibling or step-sibling, a parent (or ancestor of a parent), a step-parent, a niece or nephew, an aunt or uncle, or a son-in-law, daughter- in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law.

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MetLife: How to leverage wellness programs

Seven out of 10 employers feel wellness programs are an effective way to reduce medical costs, according to MetLife's Employee Benefits Trends Survey. Nearly half of employers who offer such programs say they improve productivity; 57 percent of employees agree.

Wellness plans also bolster employee loyalty, the study found. Over two-thirds of employees who participate in a wellness program say they are "very loyal," compared to just 52 percent of those who do not participate.

Employees who participate in wellness programs reported better health than their co-workers who did not participate, but the study also found a connection between physical and financial health. Forty-eight percent of employees participating in a wellness program say they feel in control of their finances. Only 26 percent of employees who did not participate agreed. The study argues that healthy workers are better able to "earn a living and accumulate wealth," while workers with poor health struggle with absenteeism and presenteeism. One-third of healthy workers admitted they had trouble paying bills; 56 percent of unhealthy workers said the same. Furthermore, 34 percent of unhealthy workers expect their financial situation to get worse in the next six months. Just 12 percent of healthy workers agreed.

There is ample opportunity for employers to leverage wellness programs, according to the study. Programs like smoking cessation and weight loss have shown a high success rate and are relatively inexpensive to implement. Among the most successful programs reported by MetLife are regular checkups (89 percent); weight loss (85 percent); increased exercise, and improved diet and nutrition (84 percent); managing blood pressure, and stress and cholesterol levels (81 percent); cutting back on drinking (78 percent); and quitting smoking (63 percent).

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More Employers Conducting Dependent Audits.

The New York Times (6/5, B5, Alderman), "To the list of letters that produce a groan when they arrive in your mailbox -- a jury duty summons, past-due tax bills -- add this one: a 'dependent audit.'" This "audit comes from your employer, who wants proof that the people you're carrying on the company health plan really are your dependents. If you can't prove they are, the company will drop them." And, "if your company does not already conduct these audits, chances are it eventually will." Alderman added, "An audit of a 10,000-person employer will typically uncover 200 to 500 ineligible dependents, said John Fazio...with the employee benefits firm Towers Watson. Removing these people, who cost a company an average of $2,100 a head, translates into annual savings of $420,000 to $1.05 million a year for the employer."

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More Doctors Boosting Revenue By Charging Fees For Services Not Covered by Insurance.

USA Today (6/7, Young) reports that an increasing number of physicians across the US "are boosting revenue by asking patients to pay new fees for services they say insurance doesn't cover, insurance and physicians' groups say." In fact, "the extra payments include no-show fees of $30-$50 for missed appointments, widely varying charges for filling out health forms for school, work or athletic teams, and annual administrative fees of $35-$120 or more to simply be a patient in some practices, medical associations and doctors say." William Jessee, president of the Medical Group Management Association, noted that some "doctors face increased financial pressures as insurance reimbursement hasn't kept pace with costs." Meanwhile, "WellPoint, the nation's largest insurer by membership, is receiving more inquiries from doctors seeking to charge annual administrative fees."

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The Key to Successful Health Care reform is Medical Care Cost Containment

NAHU and many other organizations have been saying for years that the key to successful health care reform is medical care cost containment, since that’s what’s really driving health insurance premiums. One of our chief criticisms of the PPACA is that we believe it does far too little to control health care spending. 

One of the ways that the Obama administration repeatedly indicated that the legislation would indeed help control medical care costs was by reducing wasteful health care spending that not only costs money but also does nothing to improve health care quality. To support their case, the administration repeatedly cited the Dartmouth College Atlas of Health Care, which uses Medicare data to provide information and analysis about national, regional and local markets, as well as hospitals and their affiliated physicians. The report shows where there is waste in the system, but according to a New York Times article this week, 

"The Dartmouth researchers themselves acknowledged in interviews that in fact it mainly shows the varying costs of care in the government’s Medicare program. Measures of the quality of care are not part of the formula. For all anyone knows, patients could be dying in far greater numbers in hospitals in the beige regions than hospitals in the brown ones, and Dartmouth’s maps would not pick up that difference. As any shopper knows, cheaper does not always mean better.”

Comments by the Congressional Budget Office (CBO) Director Doug Elmendorf only reinforced the issue with health care cost containment and the PPACA this week. On May 26, he gave a presentation to the Institute of Medicine addressing health care costs and the federal budget, and he followed it up with a post on the CBO blog. In his post, he acknowledged that “the rising costs of health care will put tremendous pressure on the federal budget during the next few decades and beyond. In CBO’s judgment, the health legislation enacted earlier this year does not substantially diminish that pressure.” Elmendorf went on to say that, “because federal health care programs make up a large share of the federal budget, putting that budget on a sustainable path would almost certainly require a significant reduction in the growth of federal spending on health care relative to the amounts projected under current law (including this year’s health legislation).”

President Obama’s Director of the Office of Management and Budget, Peter Orszag, was quick to respond on his own blog. While he acknowledged that more action must be taken to solve the country’s fiscal problem, Orszag said the health care law would trim the nation’s budget deficit by $1 trillion. “The bottom line is that we are on a long journey toward fiscal sustainability — but that should not diminish the importance and potential of the Affordable Care Act.”

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Growing Number Of Physicians Limiting New Medicare Patients.

USA Today (6/21, Wolf) reports, "The number of doctors refusing new Medicare patients because of low government payment rates is setting a new high, just six months before millions of Baby Boomers begin enrolling in the government health care program." Notably, "recent surveys by national and state medical societies have found more doctors limiting Medicare patients, partly because Congress has failed to stop an automatic 21% cut in payments that doctors already regard as too low. The cut went into effect Friday, even as the Senate approved a six-month reprieve."

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How does Carter's Benefits help ?
Carter's Benefits has immediately begun to notify clients of the changes as they occur. We will continue to stay on top of the changes as they are ever evolving. In a consultative role, Eddie Carter has begun hosting live seminars to update employers and Human Resource Managers on these changes. If you would like to host a meeting with your local community or civic organization, please contact me for details.

Eddie Carter,
Benefit Consultant



If you have questions or would like more information please give us a call or send us an email.  Our email address is Questions@CartersBenefits.Com

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