The Fact of the Month
Here’s something to talk about when you are discussing plan design options with your clients.
The estimated costs of COVID-19 treatment for private insurers range from $30.0 to $546.6 billion over two years. Enrollees or beneficiaries in private insurers out of pocket expenses could be between $2.8 billion and $48.6 billion of the costs. This data does not include the effects of insurers voluntarily waiving treatment cost-sharing or current mandate requirements in individual states. Source: COVID-19 Cost Scenario Modeling: Treatment – Estimating the Cost of COVID-19 Treatment for U.S. Private Insurer Providers, by Wakely Consulting Group, LLC for America’s Health Insurance Plans, June 8, 2020
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!
Federal Policymakers Act on Multiple Forms of COVID-19 Related Policy Relief
Over the past month, federal lawmakers continued to help individuals and employers with the economic disruption caused by the coronavirus pandemic. Many of these actions have, or could have, an impact on private health insurance coverage. One of the most significant measures is a new law that creates more flexibility for Paycheck Protection Program (PPP) loan borrowers when it comes to payroll expenses, including health benefit costs. The Internal Revenue Service (IRS) issued two new notices that increase Section 125 cafeteria plan options in 2020. Members of the House of Representatives also passed the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act, which is a possible 4th economic stimulus bill that includes many health coverage provisions.
The Paycheck Protection Program Flexibility Act of 2020 (PPPFA) gives new PPP borrowers and existing loan recipients more options, and make it much easier to obtain complete loan forgiveness. Among other things, it reduces the percentage of loan qualified payroll expenses (including health benefit expenses) from 75% to 60%. It also allows borrowers to take 24 weeks or until December 31, 2020, to spend funds for forgiveness purposes. However, it also creates a spending cliff. If a borrower does not spend at least 60% of the loan proceeds on payroll during the spending period, then no portion of their loan may be forgiven.
The Internal Revenue Service (IRS) recently published Notices 2020-29 and 2020-33 to give employers and employees new Section 125 cafeteria plan flexibility. They apply to any group health insurance plan sponsor that offers pre-tax benefits via a Section 125 Cafeteria plan, including both fully-insured and self-funded coverage options, and took effect immediately. Notice 2020-29 allows for specific types of new mid-year election changes for both health coverage and dependent care assistance programs (DCAP) and health flexible spending arrangements (Health FSA), changes to Health FSA and DCAP grace periods. Notice 2020-33 allows plan sponsors to increase their plan’s Health FSA maximum carry-over amount annually. The new guidance will permit the maximum carry-over always to equal 20% of an employee’s maximum contribution ($550 for 2020).
Finally, the HEROES Act is a very comprehensive measure designed to provide additional economic support to individuals, state and local governments, health care institutions, and business owners. It passed the House on a mostly party-line vote and included many health insurance provisions. Some of the most significant are 100% COBRA subsidies and new special enrollment periods for Medicare and Medicare Advantage and the health insurance exchanges. Another section expands the retention tax credit program, which employers may use to subsidize health insurance costs for current and furloughed employees. The measure also would mandate that all private insurance plans waive cost-sharing requirements related to any COVID-19 connected medical treatments for the entirety of the public health emergency declaration. The mandate language also mandates cost-sharing free COVID-19 testing retroactive to the beginning of the emergency declaration.
Right now, the Senate is not actively considering the HEROES Act. Still, both Trump Administration and critical GOP lawmakers indicate that some compromise measure is in the works and will include some new health coverage provisions.
New Federal Guidance Sets Health Plan Fees and Limits for 2020 and 2021
Over the past month, the federal Department of Health and Human Services and the Internal Revenue Service have issued multiple pieces of regulatory guidance that include parameters for different 2020 and 2021 health plan requirements. GPAHU has compiled the following chart with the pertinent details.
| Requirement | Applicable Coverage | Agency and Guidance | Amounts or Limits |
|---|---|---|---|
| Patient-Centered Outcome Research Institute fee for plan years that end on or after October 1, 2019, and before October 1, 2020, is due by July 31, 2020. | Applies to self-funded plans, including level-funded arrangements, health reimbursement arrangements, and health flexible spending accounts that do not qualify as an excepted benefit plan. | Internal Revenue Service Notice (IRS) 2020-44 | $2.54 per covered life, calculated by one of the three standard counting methods. Or, just for 2020, plan sponsors can use any other reasonable counting mechanism. The fee for groups with plan years that end between January 2019 through September 2019 use the amount of $2.45 per covered life, and these groups may only use one the three standard counting methods. |
| 2021 Maximum Out-of-Pocket Limits | Applies to cost-sharing for all types of individual and group health insurance plans except for those who qualify for individual market exchange-based cost-sharing reductions based on income, and qualified high-deductible health plans. | Department of Health and Human Services(HHS) Notice of Benefit and Payment Parameters for 2021 | Self-only coverage: $8,550 Family coverage: $17,100 |
| 2021 Maximum Out-of-Pocket Limits – Cost-Sharing Reductions | Applies to individuals who qualify for individual market cost-sharing reductions based on income and buy coverage through an exchange. | HHS Notice of Benefit and Payment Parameters for 2021 | Self-only coverage for people with family household incomes below 200% of the federal poverty level (FPL): $2,850 Family coverage limit for that income group: $5,700. Self-only coverage for people with family household incomes between 201-250% of FPL: $6,800 Family coverage limit for that income group: $13,600 |
| 2021 Maximum Out-of-Pocket Limits –Qualified High-Deductible Health Plans (HDHPs) | The maximum cost-sharing limits for qualified HDHPs that pair with health savings accounts (HSAs) are different than other ACA-compliant health plans. | HHS Notice of Benefit and Payment Parameters for 2021 | Self-only HDHP coverage: $7000 Family HDHP Coverage: $14,000. |
| 2021 Qualified High-Deductible Health Plan Minimum Deductible | Qualified HDHPs that pair with health savings accounts are required to have a minimum deductible account. | IRS Revenue Procedure Notice 2020-32 | Minimum self-only HDHP deductible: $1,400 Minimum deductible for family coverage: $2,800 |
| 2021 Dollar Limits for HSA Contributions | Applies to health savings accounts paired with a qualified HDHP. | IRS Revenue Procedure Notice 2020-32 | Maximum individual coverage contribution: $3,600 Maximum family coverage contribution: $7,200 Additional catch-up contribution limit (55+): $1000. |
Pennsylvania Lawmakers Introduce Small Group Claims Information Legislation
On June 8, 2020, Representative Zimmerman (R-PA-99) and nine other colleagues introduced House Bill 2582. Pennsylvania Association of Health Underwriters (PAHU) endorses this measure. It would require health insurance carriers to provide claims experience data to group policyholders with 51 or more covered employees within 30 days of the request.
Claims experience data is defined to include:
- at least two years of earned premiums separated by policy year;
- total paid and total incurred claims, including any high amount or pooled claims, and all capitated and non-capitated expenses;
- any amount in excess of individual pooling or stop-loss associated with the group.
Insurers may charge a reasonable fee for this data, and the data must be deidentified and otherwise compliant with relevant state and federal privacy requirements. Insurers that use alternative provider contracting methods, such as global contracting, may apply to the Insurance Commissioner to obtain an alternate approved way of disseminating claims information to employer groups. This measure would take effect 60 days after enactment.
PAHU members met with Representative Zimmerman earlier last year to discuss the concept of his proposed measure. The state chapter plans to organize a grassroots campaign to provide additional support for this bill and will discuss it with state House and Senate leaders during meetings scheduled later this month.
Check This Out!
If you want to expand your health policy knowledge beyond this newsletter, here is a resource to check out!
An excellent resource for companies coming back online that need to deal with COVID-19 workforce issues is the county departments of health. Bucks, Montgomery, and Philadelphia Counties have their own, and Chester County’s office also handles Delco.
