LEG REG REVIEW is a periodic newsletter produced by PHILLIPS ASSOCIATES, a professional lobbying and consultant firm located near the State Capitol. It contains news on the legislative and regulatory scene in Pennsylvania that may be of interest to the Insurance and Business Communities. It is a free member benefit for those who are members of the Pennsylvania Association of Health Underwriters (PAHU) or Manufacturers Association of South Central PA (MASCPA). Subscription information may be obtained by contacting PHILLIPS ASSOCIATES at 717/728-1217 FAX 717/232-7005 or e-mail to email@example.com. Please email firstname.lastname@example.org supplying both your name and e-mail address if you wish to be removed from this list.
SENATE COMMITTEE ACTS ON TWO INSURANCE BILLS
On May 7 the Senate Banking & Insurance Committee reported two bills of interest to the insurance industry. First was House Bill 818 (Oberlander-R-Clarion), a measure that would prohibit monies from the federally-facilitated exchanges from being used to pay for abortion services. The vote was nine to five for movement of the bill. There were two crossovers. Senator Pat Vance (R-Cumberland) voted with Democrats against HB 818 while Democrat James Brewster (Allegheny) voted for. The other bill doing the same thing is Senate Bill 3 (White-R-Indiana). It was voted out of the Senate Banking & Insurance Committee April 10 but will likely not see further legislative action versus HB 818.
The second bill that moved through the Senate Banking & Insurance Committee was Senate Bill 914 (White-R-Indiana) reflecting the Corbett Administration’s desire to replace General Fund resources for the PA Insurance Department with use of a dedicated fund akin to how the Department of Banking & Securities receives its funding. The bill uses moneys from fees and fines collected by the Insurance Department subject to an annual appropriation by the General Assembly. Fifty percent of fees such as licensing fees and all money collected through fines and settlements shall be deposited into this new fund. Having a dedicated fund has long been a goal of the PA Association of Health Underwriters (PAHU) which feels that the Insurance Department has been under-resourced given its limited staff and mounting work loads aggravated by the Patient Protection Affordable Care Act (PPACA). As of May 10, there was no House counterpart to SB 914.
TRANSPORTATION BILL GETS COMMITTEE NOD
Senate Bill 1 (Rafferty-R-Montgomery) sailed through the Senate Transportation Committee May 7 by a vote of 13 to one with Senator Richard Kasunic (D-Fayette) voting in the negative. Seen as an answer to Pennsylvania’s crumbling infrastructure, SB 1 raises revenue several ways with the one attracting most public attention is a lifting of the cap on state gasoline taxes. There are other fee changes, one of which may have a bearing on the costs of auto insurance. This is a proposed increase in the MVR fee from $5.00 to $14.00. In addition to fee increases for various functions such as drivers’ licenses, beginners’ permits, registrations, etc. SB 1 also extends the vehicle registration period from one to two years and drivers’ licenses from four to six years. According to Senator Rafferty, SB1 will account for 50,000 new jobs, $1.2 billion in new FY 2013-14 revenues and $2.1 billion in new revenues for FY 2014-15. The bill now goes to the Senate Appropriations Committee. Link: http://www.senatorrafferty.com/PDF/2013/Chart-042313.pdf
NFIP ISSUES MANUAL UPDATES
On May 3, the National Flood Insurance Program issued Bulletin W-13026 reflecting Program Changes effective October 1, 2013. Many of these are designed to fully implement parts of the 2012 Flood Insurance Reform Law. Included are premium rate changes, declaration page requirements, changes in the Flood Insurance Application, General Change Endorsement Preferred Risk Policy Application and Cancellation forms. There is also a 14-page Q&A document about the October 1 changes. Link: http://www.nfipiservice.com/Stakeholder/FEMA1/W-13026.html
FEDERAL PPACA UPDATES
EMPLOYER NOTICES. On May 8, the US Department of Labor issued employer notices regarding the Health Insurance Exchanges (Marketplaces). There are two forms, one for employers offering coverage and those which do not. The notice text must be used and there are penalties for not distributing them by October 1, 2013, the date open enrollment in the exchanges is set to begin. Notices were also released regarding COBRA. DOL links follow:
- Technical Release 2013-02 – Guidance on the notice to employees of coverage options under FLSA §18B and updated model election notice under COBRA, available at http://www.dol.gov/ebsa/newsroom/tr13-02.html
- Model notice for employers who offer a health plan to some or all employees, available at http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf
- Model notice for employers who do not offer a health plan, available at http://www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf
- COBRA model election notice, available at http://www.dol.gov/ebsa/modelelectionnotice.doc
- COBRA model election notice redline version (to show May 2013 changes), available at http://www.dol.gov/ebsa/modelelectionnoticeredline.doc
HHS ADDS NEW QUASI-NAVIGATOR LAYER
On May 9, HHS announced that it was providing $150 million in grants to community health centers, which, among other things, will “provide unbiased information to consumers about health insurance, the new Health Insurance Marketplace (exchanges), qualified health plans, and Medicaid and CHIP”. According to HHS, this “complements and aligns with other federal efforts, such as the CMS-funded Navigator program”.
TREASURY ISSUES PLAN VALUE PROPOSED RULE
On May 3, the IRS issued a proposed regulation regarding the calculation of actuarial value also known as minimum value. PPACA requires employer groups of over 50 full-time employees to have a 60% actuarial value, meaning that 60% of an enrollee’s medical expenses must be covered (Bronze plan). Not complying results in a $3,000 fine for each employee who qualifies for tax subsidies in the Exchange. In order to calculate whether or not a plan is compliant, an employer should work with their broker. In addition, an employer may:
- Use the Minimum Value Calculator offered by HHS and IRS
- Obtain an actuarial value certification of minimum vale if the plan is non-standard
- NOTE: According to analysis by the law firm of Ballard Spahr, if an employer’s plan is offered together with a health savings account, the employer may include as part of the plan’s minimum value percentage the value of the employer’s contribution to the H S A. Similarly, if the employee contributes to a health reimbursement account integrated with a health plan, the employer can generally include such contributions as part of the plan’s minimum value percentage.
Following is a link to the actual proposed rule. This is the third document from the Federal Government on the actuarial value with the first being November 2012 and the second in mid-February of this year.
PA SAYS NO TO CMS’ RISK POOL OPTIONS
As most know, the PPACA risk pool program for those who were medically uninsurable in PA stopped enrollment in March because the program had reached its financial capacity. CMS wishes to modify the contract with PA and set a final amount for claims paid between June through December 31, 2013. The state had until Friday May 10 to decide. The alternative means transferring PA risk pool enrollees into the federal risk pool program until it expires December 31. The Insurance Department replied to ask that PA continue administering the program because a transition would mean disruption caused by the change of contract terms, particularly enrollees’ continuity of care.