What changes take effect in 2011?

Provisions effective January 1, 2011:
General provisions
  • Tax-free health accounts (FSA, HSA, HRA) may no longer be used to purchase OTC drugs without a prescription.
  • Health insurers must report the proportion of premiums spent on medical care and healthcare quality improvement. Individual market and small group business must have a minimum MLR of 80% and large groups must have a minimum MLR of 85%. BCBSNC has consistently met these thresholds.
  • Employers may choose to begin disclosing the value of health benefits on employee W-2 forms. This becomes a mandatory requirement in 2012.
  • Health plans are required to revise their internal appeals processes to include additional rights for members:
    • Right to review information used to make benefit determination
    • Right to receive certain denial notices in a culturally and linguistically appropriate manner with additional information such as denial and treatment codes.
    • Non-grandfathered, self-funded plans must also have an external review process.
Provisions specific to Medicare beneficiaries:
  • Pharmaceutical companies will subsidize brand name drugs 50 percent. Medicare beneficiaries will be responsible for the remaining 50 percent. By 2020, beneficiaries will pay 25 percent of the cost of brand name drugs.
  • Medicare Part D plans reduced the beneficiary cost share of generic prescriptions by 7 percent. Beneficiary cost share will reduce an additional 7 percent each year until 2020, when beneficiaries will pay 25 percent of the cost of generic drugs.
  • Many preventive services covered with no cost sharing for most Medicare beneficiaries.
Provision effective March 23, 2011:
  • Standard menu items at chain restaurants and in vending machines will be required to have nutritional labeling of their content.

What changed in 2010?

  • Any changes that apply to your group plan this year must be made at renewal occurring on or after September 23, 2010; mid-year changes are not required.
  • Dependents under age 26 may be eligible to remain on their parents' plans if they are not eligible to buy insurance elsewhere.
  • Children under age 19 cannot have insurance coverage denied or delayed because of pre-existing conditions.
  • Insurance plans must cover, at no out-of-pocket cost to the individual, qualified preventive services.
  • Health insurance plans can no longer limit the amount of health benefits each person receives over his or her lifetime.
  • Insurers cannot terminate ("rescind") existing policies except in cases of fraud, or where information that the insured individual provided in the policy application is intentionally misstated and that information affected:
    • The insurer's decision to issue coverage in the first place
    • The terms of the coverage issued
    • The premium charged
  • "Early Retirees Reinsurance Program" - Employers may qualify to obtain financial help in order to provide coverage to those aged 55 or older but not yet eligible for Medicare - which may provide financial relief to early retirees. Learn More About the Program 

These provisions become effective for plan years beginning September 23, 2010 and after, and upon January 1, 2011 for individual coverage.

Are large employers required to purchase insurance for employees?

Employers do not have to offer coverage. However, employers with 50 or more full-time employees may face a penalty when they do not offer coverage, or if the coverage they offer does not meet the minimum requirements.

Can I keep the plan I currently offer my employees?

Yes, but there are certain rules that may apply. Plans in existence on March 23, 2010, may be "grandfathered," meaning that they do not have to comply with certain provisions of the new law unless they are changed. Federal rules for grandfathered plans were released on June 14, 2010. Learn more about grandfathered plans. 

How will health care reform affect self-insured plans?

Self-insured or administrative services only (ASO) plans will have to follow most of the same new rules that apply to underwritten plans. The difference is that where new provisions add to costs or create new costs - such as the end of lifetime and annual limits, and the removal of pre-existing condition waiting periods - the employer will bear those costs directly. New requirements for rating which go into effect in 2014 will not apply to ASO plans.

I have a lot of employees but most only work on a part-time basis. Will I still be required to offer insurance coverage?

Part-time employees will count toward the size-limits requiring coverage on a pro-rated basis based on the number of hours worked.

Does this change my Health Savings Account or Flexible Spending Account plan?

Starting in 2011, the new law prohibits HSAs, HRAs and FSAs from paying for over-the-counter medications unless a doctor has prescribed them. Starting in 2011, the penalty for non-qualified distributions from an HSA doubles from 10% to 20% of the amount withdrawn, and the new law will cap FSA contributions at $2,500 a year starting in 2013.

What will happen to my premiums?

While all businesses will be affected by the health care reform law, some will feel it more than others. Probably least affected will be firms that already provide health insurance now and have a pool of employees large enough to allow the companies to self-insure.

We believe that the price of insurance on average will increase, especially plans for individuals and small businesses, as a result of certain provisions in the reform legislation. These provisions guarantee richer levels of benefits than most consumers buy today. Insufficient discounts for the young and healthy will encourage many of them to forgo coverage and pay the penalty instead. New fees and taxes mandated by the new law will also likely increase the cost of premiums as they are phased in. For the millions of individuals and small employers who qualify for subsidies, what they actually pay for insurance themselves may not increase.

Why do health insurance premiums continue to rise?

Some of the factors driving health insurance premiums:

  • Increasing use of the health care system due to an aging population, obesity and chronic illnesses
  • New treatments
  • Prescription drugs
  • Expensive new technologies

Changing the way medical care is paid for by insurers and government programs is considered to be the most effective way to address these factors.

While the new law establishes a few new programs aimed at these cost factors, the law doesn't aggressively attempt to control rising health care costs. How do medical costs affect what people pay for health insurance?

What sorts of penalties are there for large businesses?

Employer Penalties - In 2014, if an employer has more than 50 employees and has at least one full-time employee who receives federal premium credits or cost sharing subsidies to help offset the cost of health insurance, that employer will pay a penalty. The fee will be determined by a complex formula, and it will make a difference whether or not the employer offers health insurance.
There are two scenarios where penalties occur:

    1. An employer:
    • Has more than 50 employees
    • Doesn't offer coverage
    • Has at least one full-time employee who receives a government tax credit to help offset the cost of health insurance

    The penalty in this particular case:

    (The number of full-time employees - 30) x $2,000

    2. An employer:
    • Has more than 50 employees
    • Offers coverage
    • Has coverage that costs more than 9.5% of any employee's household income
    • Employees buy coverage on their own instead and qualify for and receive federal subsidy
    • Has at least one full-time employee who receives a government tax credit to help offset the cost of health insurance

    The penalty for this condition equals the lesser of the following:

    (The number of full-time employees - 30) x $2,000

    OR

    (The number of employees receiving federal subsidy) x $3,000