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Life Health > Health Insurance > Your Practice

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Critical first implementation steps in the healthcare reform law went into effect last week, and a flurry of new proposals, guidance and directives regarding the law were issued by federal agencies.

At the same time, the Department of Health and Human Services has issued guidance that provides the industry with great flexibility when selling limited-benefit medical plans.

The new rules, effective for plans that go into effect Jan. 1, 2011, bar lifetime limits on essential benefits. This provision applies to all plans.

Annual limits will be phased out through 2014 for all plans, except grandfathered individual plans, according to officials at the National Association of insurance and Financial Advisors, and the National Association of Insurance Commissioners.

Also going into effect is a ban on rescissions, that is, retroactive cancellation of policies. The law bans rescissions except in cases of fraud or intentional misrepresentation of material fact.

Under the new rules, a wide range of preventive care provisions including immunizations, well baby and child screenings, and well women exams must be covered without cost-sharing under all non-grandfathered plans.

Moreover, plans that cover dependent children must extend coverage until the child’s 26th birthday. This applies to all types of plans, however before 2014, group health plans will be required to cover adult children only if the adult child is not eligible for employer-sponsored coverage. Adult children cannot be charged more than any other dependent.

Also, effective as of the 23rd, children under 19 years of age cannot be denied coverage or benefits based on medical status or past illnesses. This applies to all plans except grandfathered individual plans.

As to new issues, Joel Kopperud, a director of government relations at the Council of Insurance Agents and Brokers, said that the CIAB’s primary focus right now is the latest request for comments on the law’s non-discrimination requirements. “Our fear is that if the evaluation is based on actual enrollment and not eligibility, the requirement could completely stymie new plans,” he said.

The healthcare reform law extended Internal Revenue Code Section 105(h) nondiscrimination rules to insured health plans. The law prohibits fully-insured group health plans from discriminating in favor of highly compensated individuals with respect to eligibility and benefits.

These requirements apply to non-grandfathered plans and are effective for plan years beginning on or after September 23, 2010. The rules of section 105(h) continue to apply to any self-insured plan regardless of whether the plan is a grandfathered one.

The agencies also last week issued a grace period through July 1, 2011 for employers and health plans to comply with several significant changes in federal claims review and appeals standards and expanded the “safe harbor” standard for complying with the new external review requirements included in the healthcare law.

James A. Klein president of the American Benefits Council, said the actions by the Departments of Health and Human Services, Treasury and Labor, was prompted by the ABC voicing “serious concerns” over the past several weeks regarding various aspects of the claims procedure rules issued by the agencies on July 17.

“As initially issued, the regulations could not feasibly have been implemented for plan years beginning on or after September 23, 2010, as the agencies originally would have required,” he said.

“The new guidance will help ensure that employers and health plans have much-needed additional time to make complex changes in the procedures they use to make accurate and efficient determinations on hundreds of millions of health care claims each year,” Klein said.


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