Monday, August 2nd, 2010
Good Neighbor Insurance (www.gninsurance.com and www.gnazhealth.com) is continuing to update our clients on the new health insurance laws. There are six major coverage options for those in the US and even though some of the rules and regulations are similar for all many differences are there and it all depends on how old you are and for whom you work.
These six major coverage options are:
(1) Individual or family coverage
(2) Employee/employer group option for small businesses (typically under 50 employees)
(3) Employee/employer group option for large businesses (typically larger than 50 employees)
(4) Exchange options through the state you are residing in (fully integrated 1-1-2014 and are quasi-government and private insurance coverage combined)
(5) Medicare (which include Parts A, B, C, and D) for those 65 years onwards
(6) Full government health plans like Medicaid, CHIP, TRICARE, VA and other coverage plans as may be designated by the Department of Health and Human Services based mostly on financial criteria and/or military service.
Note: updated 8-1-2010
Note 2: This information is not intended to be legal advice but based on current interpretations that may change depending on new federal and state rulings. 
Preventative Services:
Q – Will in-force policies have to comply by covering Preventative with no cost sharing?
A – Only non-grandfathered plans must comply with this market reform.
Q – Will all size cases have to change their contract to comply with the list of Preventative Services?
A – Yes, if not grandfathered.
Q – Will these Preventative Services be covered the same way while under an HSA?
A – The legislation does not differentiate between HDHP and other health plans.
Q – Is this for group policies, or individual as well?
A – The preventative services apply to both Individual and Group non-grandfathered policies.
Q – Are these changes for under 65 plans only, or will they apply to senior plans like Medicare Advantage?
A – The changes apply to under 65 plans only.
Pre-existing Condition:
Q – I am a 50% disabled veteran with a condition that prevents me from buying insurance. The condition is covered by the VA Hospital but ALL other non-related issues are not.
The only insurance I have ever had was through my wife’s employer. She has been retired nearly ten years.
I noticed on the application for the High Risk Pool, that one of the questions is about government coverage including the Veterans Administration. Will I qualify for this program? Will they cover everything but what is covered by VA?
A – Unfortunately, there are very few details available until you apply and get either an acceptance or rejection from HHS. I would go ahead and apply and see if you are accepted.
Grandfathered Status – Tax Credit:
Q – If you opt to stay with your plan, which would put you into the “grandfathered” status, would you still be eligible for the small business tax credit?
A – Yes, as long as all other eligibility criteria is met.
Q – If you have individual coverage, is there any incentive to stay on an individual plan, or at some point in time, should we be telling our clients or prospects to create a group if they have a business so they can cash in on the tax credit? I have someone right now who owns a dental office and he is asking about reform and his situation. Currently, they do not offer coverage to their employees?
A – Individual plans like group plans can be grandfathered. The same situations between offering group and individual will continue to exist (except the guaranteed issue factor after 2014) i.e., the need for an employer contribution, meeting participation requirements, etc. Remember small employers are not going to be penalized if they don’t offer a group plan. But, the only way to receive the small business tax credit is with a group plan. If the only reason for creating the group is the tax credit, they should probably be certain they meet the necessary criteria.
Q – Beginning Sept. 23, 2010, employers are required to allow employees to add dependents up to the age of 26, EVEN WITH Grandfathered plans? If so, is September 23, 2010 considered an “open enrollment” period where employees can add older dependents? Or can older dependents only be added at the company’s open enrollment period?
A – The requirement that plans allow “children” to age 26 back onto the parents plan is effective the first day of the plan year following September 23, 2010 (so for calendar year plans January 1, 2011). This also applies to grandfathered plans (the difference is that if the “child” has coverage available through their own employer, the grandfathered plan does not have to let them on.) There will be a 30 day enrollment period – generally coinciding with open enrollment.
Q – As long as employers keep their EXACT same plan at renewal, this 105(h) code DOES NOT come into play (except for the dependents age 26 rule)?
A – 105(h) and the “to age 26” rules are not related (except by the fact they were both included in PPACA), but this is accurate the 105(h) does not come into play on grandfathered plans.
Carve-outs:
Q – This IRS code affects ALL businesses, big and small? Although some rules (like mandatory health insurance) don’t affect business with less than 50 employees, the IRS 105(h) code affects all businesses from implementing “carve-out” plans?
A –The highly compensated test also applies to small employers. However, carve-outs could continue to exist, if the carve-out favors the non-highly compensated.
Q – With the 105(h) code, are employers (or is the business) required to “cover” the same percentage of health insurance premiums for all employees? I have several groups that offer insurance to all of their employees, but the upper management usually covers 100% of employee and dependent premiums, while only covering 50% of the employee’s premium (and 0% of the dependents, would this still be okay under 105(h)?
A – If there are two different contribution levels, then each separate level would be tested as if it were a separate plan. Generally, this would cause one of the two (if not both) to fail the highly compensated test.
Q – There’s some concern and lack of information on the anti-discrimination – are carve outs still allowed?
A – Technically “carve-outs” are not disallowed; but the plan must be able to pass the IRC 105(h) test or there’s a sizable penalty to the employer (if fully insured, if self insured the benefit becomes taxable to the highly compensated employee).
Q – It seems if the employee works less than 30 hours a week, they do not have to be considered eligible for employer based benefits?
A – This is true however, in 2014 when you “count” employees to determine if there are 50 or more, you count hours, but you do not have to offer coverage to part-time (<30 hours) or seasonal.
Q – Specifically: I have a client who has close to 200 employees—home health agency. They provide benefits for only their admin staff and none of the other employees. To what rules are they subject?
A – If they don’t remain grandfathered, they’ll need to pass 105(h).
Q – Some of their caretakers work for more than one agency, how does that affect the employer if they work the 30 hours?
A – The determination of part-time versus full-time is still relative to just that employer (may be an issue if there’s common ownership).
Q – If a group is under 50, and they are not required to offer health insurance to their employees, can they still do a “carve out”?
A – As long as they can meet the highly compensated test in IRC 105(h).
Miscellaneous
Q – What is PPACA and DHHS?
A – Patients Protection and Affordable Care Act (PPACA)
Department of Health and Human Services (DHHS)
Doug Gulleson totally adores scuba diving and travels overseas throughout the year with his underwater camera in one hand and a cup of coffee in the other. He knows through experience never to leave home without his travel insurance and credit card too. Visit Good Neighbor Insurance at www.gninsurance.com/travel-A/international_travel_insurance.asp for international travel and www.gnazhealth.com for Arizona insurance coverage.
