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Life Health > Health Insurance > Health Insurance

PPACA Experts: The Little Things Matter

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Provisions in the Patient Protection and Affordable Care Act of 2010 (PPACA) that have attracted little attention up till now could give health insurers and employers incentives to reduce the number of products and plan options they offer.

Other provisions could give employers new incentives to prefer part-time employees over full-time employees, and seasonal employees over year-round employees.

Health policy watchers have included those thoughts in Web seminars presented in response to the recent U.S. Supreme Court ruling upholding a PPACA provision that could prod many individuals to own a minimum level of health coverage starting in 2014.

Kim Buckey, a principal at HighRoads Inc., Woburn, Mass., talked about the effects of a relatively popular PPACA provision — a new summary of benefits and coverage (SBC) program — during a recent webinar organized by her company.

Anne Phelps, a principal in the Washington office of Ernst & Young L.L.P., and Catherine Creech, a principal in the accounting firm’s national compensation and benefits practice, discussed the definition of “full-time equivalent” (FTE) employee today during a separate PPACA webinar organized by Ernst & Young.

PPACA opponents are still fighting implementation of PPACA in the courts, in Congress, and at federal and state regulatory agencies.

The Supreme Court ruled only that Congress has the authority under the U.S. Constitution to impose a tax on taxpayers who fail to meet PPACA health insurance ownership requirements, and that Congress can use the flow of new federal funding to encourage states to expand Medicaid eligibility. The court has not yet ruled on other constitutional questions that could affect PPACA implementation, such as whether the individual coverage mandate provision or other PPACA provisions affect U.S. residents’ right to privacy.

If PPACA takes effect on schedule and works as drafters expect, it will impose a tax on many individuals who fail to own a minimum level of health coverage by 2014, and it will impose a “shared responsibility” penalty on employers with the equivalent of more than 50 FTE employees who fail to offer health benefits.

The law also includes many other provisions, including a provision that will require health insurers and employers to provide standardized, 4-page SBCs. The SBCs are supposed to help individuals and employers make apples-to-apples comparisons when they’re shopping for coverage.

The SBC would include a summary of basic plan features, along with coverage examples that show how a specific enrollee’s plan would work if the enrollee had a baby, were managing Type II diabetes, or were dealing with other common illnesses, chronic conditions or life events. Consumers would get SBCs when they apply for coverage or enroll in group plans. Consumers also could get SBCs upon request.

The SBC requirements are set to take effect Sept. 23 for individual coverage and for group plan open enrollment periods that begin on or after Sept. 23, according to the final rule.

SEPT. 23, 2012

Federal regulators could postpone the SBC compliance deadline, but Buckey pointed out during the HighRoads webinar that for now, at least, the SBC deadline is just a little more than 2 months away.

Buckey said one of the easiest ways to streamline the SBC creation and distribution process is to streamline health plans.

“Spend some time on the front end looking at your designs,” Buckey said. “You may be able to identify opportunities to reduce your number of SBCs.”

For employer SBC issuers, easy ways to reduce the number of SBCs required could include “consolidating carriers” and putting retirees in a separate retiree health plan that is not subject to the SBC requirements, Buckey said.

“Perhaps you eliminate a deductible option,” Buckey said.

Buckey said SBC issuers also should decide whether they are going to outsource the SBC process, where they can get the data they need to create an SBC, how many SBCs they will need to send, and who will be doing any calculations or eligibility determinations needed in connection with creating and sending SBCs.

Creating an SBC should be just part of an issuer’s communications plan, and an issuer that does not have a plan should get one, Buckey said.

Issuers should be giving enrollees information about the SBCs and about other PPACA-related changes that are in the pipeline, Buckey said.

“Nature abhors a vacuum,” Buckey said. “Where information isn’t provided, people will start making things up.”


During the Ernst & Young webinar, Phelps and Creech tried to give viewers a feel for how complicated questions about the terms used in implementing PPACA could prove to be.

One challenge is that several federal agencies, including arms of the U.S. Department of Health and Human Services, the U.S. Labor Department and the Internal Revenue Service, are involved with developing the regulations and batches of guidance needed to implement PPACA.

“We don’t have any fixed dates” for when the regulatory documents will be coming out, Creech said.

“The general answer is, ‘Soon,’” Phelps said.

In some cases, Phelps said, documents could arrive as early as this summer. 

Phelps said once of the batches guidance she wants to see would answer the question, “Who is a ‘full-time employee?’”

Whether a worker is eligible under PPACA for group health benefits depends on whether the worker is a FTE.

Determining whether an employer has 50 or more FTEs and comes under the PPACA health benefits rules that apply to large employers involves a calculation that includes part-time workers as well as full-time workers, but no seasonal workers, Phelps said.

Many employers define FTEs as employees who work more than 32 hours per week, or more than 40 hours per week. For health benefits eligibility purposes, PPACA will lower the cut-off to 30 hours per week, Creech said.

Phelps said she also is hoping federal regulators will come up with a way to keep employees with variable work schedules from shifting from one coverage eligibility category to another from month to month.

Most customers buy health insurance on an annual basis, and monthly category churn could make it difficult for enrollees to maintain stable coverage, Phelps said.


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