The Fact of the Month
Here’s something to talk about when you are discussing plan design options with your clients.
Medicare’s annual election period begins on October 15th, so it’s a good time to increase your knowledge about this thriving market segment. Over one-third of all Medicare beneficiaries (34% or 22 million people) are enrolled in private Medicare Advantage plans and enrollment in this market space has nearly doubled over the past ten years. Cost is a huge reason why—more than half of these beneficiaries (56%) pay no additional premium for their coverage, other than the Medicare Part B premium, even though they have access to enhanced benefits. Among Medicare Advantage enrollees who pay a premium for their plan, the average premium was $65 per month in 2019, and premiums in this sector declined by $5 per month between 2018 and 2019
Source: The Kaiser Family Foundation, https://www.kff.org/medicare/issue-brief/a-dozen-facts-about-medicare-advantage-in-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 Legislator Wants to Help Mid-Sized Groups Access Claims Data
Representative David Zimmerman (R-99), who represents Lancaster County and serves on the House Insurance Committee and the Health Committee, has announced a plan to introduce legislation to give employer group health plan sponsors with 50-99 employees greater access to aggregate claims data for their plan. Currently, it is very difficult, if not impossible, for fully-insured groups of this size to access deidentified claims data or other details to support the premium increases they receive at renewal time. The Affordable Care Act requires small groups to be community rated, and insurers readily provide claims details to fully insured groups over 100, but groups of 50-99 cannot access their claims history. According to Representative Zimmerman, there are no provisions in state law affirmatively allowing this practice, and there is also nothing in state law which prohibits carriers from refusing to divulge claims history information to groups of this size. The Pennsylvania Insurance Department reports it does not have the authority to require that insurers turn over deidentified claims information at the request of a small business employer. However, eight states haves passed legislation to ensure that small and mid-size businesses can access aggregate claims data, which allows business owners in the state to make fully informed shopping decisions at rate renewal time.
Members of PAHU are making plans to meet with Representative Zimmerman to discuss his legislation later in October. If you are interested in participating, please contact our state legislative chair, Jessica Waltman at firstname.lastname@example.org.
Attorney General Shapiro Proposes to Expand His Authority Over Unfair Trade Practices
State Attorney General Josh Shapiro has proposed broadening the scope of the state’s “Unfair Trade Practices Consumer Protection Law” via the regulatory rulemaking process. The measure would broaden the definitions of illegal conduct and expand the attorney general’s authority by giving his office control over private rights of action and implementation of a state antitrust measure absent legislative authority.
Given that the state’s unfair trade practices law is often employed in the health insurance market sector, including with insurance agent rebating claims and recently with regard to disputes between the private insurance carriers, Highmark and UPMC, our association is watching the progress of this regulation closely. Currently it is being reviewed by the Commonwealth’s Independent Regulatory Review Commission (IRRC). The IRRC can approve or reject the measure or direct the Attorney General’s office to make changes. The Commission has until the end of November to make a decision.
Trump Administration Issues A New Proposed Rule to Give Employers Clarity About Individual Coverage HRAs
The Trump administration just released a proposed rule to create some compliance safe harbors for employers and address lingering questions regarding individual coverage health reimbursement arrangements (ICHRAs). This measure will not be final until January of 2020, at the absolute earliest. However, this version of the regulation can be used by employers for compliance purposes in 2020, so here are the highlights:
- The proposed rule is intended to address compliance concerns for applicable large employers (ALEs) subject to the employer shared responsibility provisions of the Affordable Care Act (ACA), as well as questions relative to the IRC 105(h) nondiscrimination requirements.
- The original ICHRA regulation finalized in June of 2019, left it unclear as to how an ICHRA offering could meet the ACA’s coverage “affordability” and “minimum value” tests. Meeting these tests is essential to ALEs that want to avoid employer mandate “B penalty” liability.
- The new proposed rule makes it clear that to offer an “affordable” ICHRA, the employer must make a minimum contribution to the employee’s ICHRA based on a formula that relies on the lowest-cost silver marketplace plan the employee could buy. This means that in addition to employee income, each employee’s age and geographic location are factors.
- To simplify the geographic location factor, the proposed rule creates an optional safe harbor for employers, allowing them to use the zip code for the primary place where an employee works on the first day of the plan year (rather than their home address) in many situations when determining the cost of the applicable lowest-cost silver marketplace plan.
- The proposed rule does not include an age-based safe harbor, so ALEs that adopt the ICHRA approach to health coverage will still need to perform individual employee contribution calculations each year.
- To address the concern that the cost of the lowest-cost silver plan will never be available before mid-October of each year, the new guidance creates the “look-back month” safe harbor. It allows businesses to use past premium rates for the lowest-cost silver plan in their affordability calculation. Calendar-year plans may use the premium rates for January of the prior calendar year. Non-calendar year plans may use the monthly premium for the lowest-cost silver plan for January of the currentcalendar year.
- To address the “minimum value” requirement, the proposed rule specifies that any ICHRA that meets the “affordability” test is also deemed to provide minimum value.
- Along with the proposed rule, the Trump Administration released an online affordability tool to give employers access to health insurance premium data based on an eligible employee’s age and geography. It is designed to help employers determine how much their annual minimum ICHRA contribution amount for each employee needs to be.
- In addition to addressing employer mandate safe harbors, the rule attempts to address IRC 105(h) nondiscrimination testing concerns by specifying certain conditions that will prevent an ICHRA from failing nondiscrimination testing. However, the nondiscrimination safe harbors in the proposal do not address every reason why an ICHRA could fail the testing, and the rule gives detailed examples of why nondiscrimination testing failure is still a concern for many employers.
In the preamble to the proposed measure, the Trump Administration indicates more ICHRA guidance is coming, particularly about how ICHRA offerings will work with employer reporting requirements. As soon as more information is available, GPAHU will keep its membership informed.
Check This Out!
If you want to better understand how business leaders view healthcare and how it could influence your clients, check this out!
The NAHU Healthcare Happy Hour provides an in-depth review of the most recent trends in the health insurance industry as well as any actions being taken by Congress and the Trump Administration. The podcast is posted every Friday on iTunes, Spotify, and Stitcher. Check out this video about it, including how to subscribe!