The Fact of the Month
Here’s something to talk about when you are discussing plan design options with your clients.
Between 2008-2018, deductibles in employer-sponsored health plans went up 212%! While most people with employer coverage like their plan (68%) and feel grateful to their employer for providing coverage (72%), the higher the deductible, the more likely an individual is to have negative views of their coverage and their employer. Among those in the highest deductible plans, over half (55%) give their plan a grade of “C” or below, and half (51%) say their employer could be providing something better. Source: “Kaiser Family Foundation/LA Times Survey of Adults with Employer-Sponsored Health Insurance,” May 2019
The Big Three
Each month GPAHU identifies three top public policy or legal developments that could impact our members and their clients. Here are this month’s big three!
Pennsylvania Insurance Department Is Proposing a State-Based Exchange and Individual Market Reinsurance Pool
Our policymakers in Harrisburg want to create a state-based health insurance exchange to serve the Commonwealth beginning in 2021. They are also considering a federal Patient Protection and Affordable Care Act (ACA) Section 1332 waiver to start a statewide individual market reinsurance pool to help stabilize and lower premiums, particularly for people who are ineligible for income-based exchange subsidies. With both of these policy ideas, the intention is to work closely with health insurance agents and brokers.
The Pennsylvania Association of Health Underwriters (PAHU) has been involved with discussions in Harrisburg about these ideas since the beginning. The Pennsylvania Insurance Department (PID) consulted our state legislative committee ahead of time, and the draft legislation gives PAHU has a permanent seat of the state exchange’s advisory board. PAHU was also asked by the House Insurance Committee Chair, Representative Tina Pickett (R-110thDistrict) to present testimony about the bill during a May 7 hearing. Since that time, PAHU board members have met with state legislative leadership about the bill multiple times, and more meetings are scheduled for June 18.
The PID’s idea is to create the state-based exchange first, using private technology that already powers existing state-based exchanges. With savings generated from the state-based exchange user fee (the same fee carriers are paying to participate in the federal exchange now), the state would fund the reinsurance pool for its initial round of payments to individual carriers with specific high-cost claims. If the Section 1332 waiver is approved, the federal waiver funds will go to offset the costs of the reinsurance payments in the future.
The PID and many state lawmakers are hoping to enact this legislation this summer, but if adopted, it will not directly impact coverage options in Pennsylvania until 2021 at the earliest. However, if these ideas move forward, they will have a dramatic and potentially very positive effect on individual market products, rates, and delivery mechanisms. GPAHU will keep our membership posted about any future developments.
Significant Federal Regulatory Action Affecting Current and 2020 Plans
The federal government is continually putting out regulations, guidance, and notices. To save our members from having to wade through all of that legalese, we put together a bullet point list of some of the most important recent developments.
- The final 2020 Notice of Benefit and Payment Parameters rule changed the federal premium tax credit subsidy amount formula for 2020 on forward. The adjustment should lower overall federal costs for premium tax credit payments, but it will also make the value of the subsidies lower for consumers and increase consumer cost-sharing requirements across all private-market plan options.
- Due to the formula change, in 2020, the maximum out-of-pocket limit on cost sharing for all health plans will be $8,150 for self-only coverage and $16,300 for everything besides self-only coverage.
- The change will presumably affect the way the Department of Treasury calculates the annual percentage of family income that an individual can pay for self-only group coverage and have that coverage be “affordable.” The “affordability” percentage is what applicable large employers use to set their premium contribution rates each year and avoid employer-shared responsibility provision (employer mandate) liability. The affordability rate for 2020 should be higher in years past, giving employers more wiggle room with their premium contributions, but we have to wait for Treasury to make an official rate announcement—probably later in June.
- The Internal Revenue Service (IRS) released Revenue Procedure 2019-25, which sets the 2020 dollar limits for health saving account (HSA) contributions and the minimum deductible and maximum out-of-pocket limits for qualified high-deductible health plans (HDHPs). In 2020, HSA owners with individual coverage will be able to contribute $3,550, and those with family coverage may contribute up to $7,100. The catch-up contribution limit remains steady at $1000.
- To contribute to an HSA, a person must be under age 65 and have a qualified HDHP. For 2020, the minimum self-only HDHP deductible will be $1,400, and the minimum deductible for other coverage will rise to $2,800. The maximum out-of-pocket limits for HDHP plans are different than other ACA-compliant health plans, and in 2020, those with self-only HDHP coverage will have a $6,900 limit. The maximum out-of-pocket payment level for those with family HDHP coverage will be $13,800.
- Changes were proposed to the Affordable Care Act Section 1557 regulations. These are non-discrimination rules that apply to any health insurance issuer that gets federal funds from the Department of Health and Human Services, including almost all fully insured carriers and some self-funded plans. The proposed rule would eliminate pregnancy termination and gender identity from the definition of sex discrimination. It also would end a requirement that affected plans provide nondiscrimination notices to consumers and inform beneficiaries that translation assistance services are available. So if the changes are finalized, then affected group health plans will no longer be required by Section 1557 to cover gender transition services and specific consumer notice requirements will be eliminated. This rule is not yet final and still in the comment stage. NAHU will be submitting comments on behalf of all members, and if the changes go into effect, they will be applicable for the 2020 plan year at the earliest.
- Payment of the Patient-Centered Outcomes Research Institute (PCORI) fee is due on July 31, so remember to remind any clients that have to pay the tax directly. Businesses that offer self-funded health coverage to their employees (including health reimbursement arrangements and certain flexible spending accounts) must calculate and pay the PCORI fee annually, using Form 720. For plan years ending between October 1, 2018, through September 30, 2019, the PCORI fee is $2.45 per covered life.
Surprise Billing Legislation Gains Momentum in Harrisburg and Washington, DC
The Pennsylvania General Assembly is right in the thick of its 2019-2020 legislative session, with new bills being introduced and hearings being held almost every day. A top health policy priority is legislation to help people who go to an in-network healthcare facility but later receive an expensive medical bill from an out-of-network provider. Right now, the House Insurance Committee is finalizing a discussion draft bill to address surprise out-of-network medical billing. The measure would protect people who unintentionally get emergency care from an out-of-network provider. In those cases, consumers would simply pay in-network cost sharing; all balance billing would be handled between the provider and carrier, shielding the consumer. Patients will be notified in non-emergent cases, and people could seek other in-network care. PAHU had the opportunity to provide feedback on this legislation, and we expect the legislature to consider it later this year.
The surprise billing legislative activity in Harrisburg mirrors what is going on in our nation’s Capital. Recently President Trump expressed an interest in fixing this problem, and over the last month, bipartisan leaders in both the House and the Senate crafted solution-oriented bills specifically addressing surprise billing. In addition, the leaders of the Senate Health, Education, Labor, and Pensions (HELP) Committee released a discussion draft of a health cost containment bill that covers balanced billing, among many other issues. Among many issues covered in this draft legislation is a provision requiring disclosure of direct and indirect compensation for brokers and consultants to employer-sponsored health plans and enrollees in plans on the individual market. NAHU’s podcast, “NAHU Responds to Broker Compensation Disclosure Proposal” provides an overview of how the broker community could be impacted if this provision is included in the final legislation. Listen to the podcast here.
While none of the proposals that could impact Pennsylvanians directly have become law yet, other state laws could impact GPAHU members and their clients. The New Jersey Out-of-Network Consumer Protection, Transparency, Cost Containment, and Accountability Act went into effect on August 30, 2018, and other states have enacted surprise balance billing measures too.
Continue to watch this space and your email for grassroots communications from GPAHU and PAHU. When state-level or federal legislation that could impact our members and your clients heats up, we may ask you to send your lawmakers an email to explain your point of view. If anything passes that will affect our industry, we will let you know in a future issue.
Check This Out!
If you want to expand your health policy knowledge beyond this newsletter, here is a brand-new resource to check out!
The National Association of Health Underwriters just released a brand-new 10-part certification course titled, Employer-Sponsored Plans in a Post ACA Era. This course is entirely different from the old PPACA certification course and has been fully updated to meet the needs of today’s brokers and their employer clients. If you enroll in the online program, you can earn ten hours of general Pennsylvania continuing education credit. Besides access to all of the online course materials, you will get a hard copy of the course textbook in the mail. This book includes references to every ACA rule or scenario you would want to cite with a client. Click here to sign up today!