What does the PPACA verdict mean for insurers and employers?
With the Supreme Court’s decision on the new healthcare law in place, employers and insurance providers are taking a closer look at what’s ahead in the coming months and years. One thing that’s certain is that both groups will have to adjust to the new landscape to survive.
Many of the provisions in the new law are scheduled to take effect on January 1, 2014. Three fundamental provisions have received the most attention…
- The requirement to carry health insurance
- Health insurance Exchanges through which consumers can purchase coverage
- Penalties for employers that do not offer health insurance if their employees receive subsidized coverage in Exchanges
With these reforms, big changes are ahead for the insurance market. Insurers and employers will be subject to new rules on how to treat individuals and groups that apply for coverage, including the following:
Guarantee Issue and Renewal
Every carrier in individual and small group markets will have to offer coverage to any individual or group that applies, though PPACA permits the use of open enrollment and special enrollment periods to limit this guaranteed issue period to certain times of the year.
Special Enrollment Provision
Under HIPAA, individuals who are otherwise eligible, but had declined health coverage because they had other group health plan or health insurance coverage, must be permitted to enroll in the plan (regardless of any late enrollment provisions) upon loss of eligibility for the other coverage or if employer contributions toward the other coverage cease.
Loss of eligibility includes loss of coverage due to legal separation, divorce, voluntary or involuntary termination of employment, reduction in hours, children's aging out of coverage, or moving out of an HMO service area. It does not include loss of coverage due to a failure of the individual to pay premiums on a timely basis or termination of coverage for cause.
Under HIPAA, special enrollment rights are also triggered when employer contributions toward an individual's other coverage cease, regardless of whether the individual is still eligible for coverage under the other plan.
Adjusted Community Rating
All carriers in the individual and small group markets will only be able to vary their premiums by family size, geography, tobacco use and age, and other rating factors will be prohibited.
Prohibition on Pre-Existing Condition Exclusions
Carriers are prohibited from denying access to necessary medical services and items related to a pre-existing medical condition, regardless of the length of the exclusion period.
Excessive Waiting Periods
Many employer-provided health plans don’t offer benefits to new employees until they have been with the company for an extended period of time. Under PPACA, these general waiting periods are limited to 90 days.
Essential Benefits Package
PPACA specifies benefit requirements that carriers must offer if they are offering coverage in the individual and small group markets (for example, maternity coverage and hospitalization coverage).
Uniform Application of Rating Reforms
States will have to provide a level regulatory playing field for all carriers by applying the new reforms uniformly to all insurers in the market to promote fair competition and benefit consumers.
Minimum loss ratios (MLR) also pose an ongoing challenge for insurers. Since the progress of claims is always unpredictable, the minimum loss ratio requirement – the idea that 80-85 cents of every healthcare dollar should go toward medical care – might be difficult for carriers to achieve.
Of course, everything could change, and one of the biggest points of uncertainty is the November elections. With four months of debate and the Presidential and Congressional elections still to come, PPACA’s ultimate fate is anyone’s guess.
Brokers – if you’re wondering what to tell employers about COBRA in the age of healthcare reform, download our free guide now!