The Fact of the Month
Here’s something to talk about when discussing plan design options and employer contribution strategy with group clients in the New Year.
In April 2022, overall consumer prices rose by 8.3% from the previous year, while prices for medical care increased by only 3.2%. This is unusual, as health prices historically outpace prices in the rest of the economy. However, the relatively high rate of inflation seen in the rest of the economy may eventually translate to higher prices for medical care. This may lead to steeper premium increases in the coming years.
Source Source: Wagner, Emma; Ortaliza, Jared; Hughes-Cromwick, Paul; Krutika, Amin; Cox, Cynthia. “Overall Inflation Has Not Yet Flowed Through to the Health Sector,” Peterson-KFF Health Systems Tracker. June 3, 2022.
The Big Three
Each month GPAHU identifies three top public policy or legal developments that could impact our members and clients. Here are this month’s big three!
Impact of the Dobbs Decision on Health Insurance Coverage and Group Benefit Plans
Pennsylvania House Insurance Committee Chair, Tina Pickett (R-110), introduced legislation in April intended to protect Pennsylvania insurance consumers in the advent of a cybersecurity attack. The bill, known as H.B. 2499, is based on model legislation created and approved by the National Association of Insurance Commissioners in 2016. When the model was initially crafted by the NAIC, NAHU and all other major agent and broker associations expressed concern, since the requirements for agents and brokers who own or work for small businesses are fairly onerous. The House Insurance Committee held a hearing on the bill on June 8, 2022. PAHU is monitoring the issue and may submit testimony or a letter to legislators to explain these concerns.
On Friday, June 24th, the Supreme Court released its decision in Dobbs v. Jackson Women’s Health Organization,finding that the United States Constitution does not guarantee a right to abortion access and effectively overturning its prior decisions in Roe v. Wade and Planned Parenthood v. Casey. The decision has led to many questions from employers who sponsor group health insurance coverage and those who advise them. While some of these questions may involve long-term legal battles before they are resolved, others have clear answers guided by existing law.
Coverage of Abortion Services
Insurance coverage of abortion services in fully-insured plans will depend on state law, just as it did before the Dobbs decision. In the Delaware Valley, both New Jersey and Delaware allow and provide coverage for abortion services through aspects of the fully insured market. In Pennsylvania, private health insurance carriers and group plan sponsors may offer abortion-related services without restriction, but individual abortion coverage is only available through Pennie by purchase of a special rider. Otherwise, coverage is limited to situations of rape, incest or when the life of the mother is endangered. A chart and a map of coverage restrictions in all states is available here.
Self-funded plans are generally exempt from state benefit design requirements because ERISA preempts such laws. However, a self-funded plan cannot pay for a procedure that is illegal in the location in which it is performed. It is also worth noting that in recent years there has been litigation surrounding the extent to which state laws seeking to regulate self-funded health plans are preempted. In a 2020 decision, the Supreme Court ruled that an Arkansas state law regulating pharmacy benefit managers was not preempted by ERISA because it did not govern “a central matter of plan administration or interfere with nationally uniform plan administration.” It is likely that certain states will pass legislation attempting to limit the autonomy of self-funded plans to determine the extent to which they cover abortions and/or travel out of state for the purpose of obtaining an abortion. If passed, it is also likely that any such law will become the subject of a near-immediate legal battle.
The federal Pregnancy Discrimination Act of 1978, an amendment to Title VII of the Civil Rights Act which applies to all employer-sponsored health insurance plans, makes it clear that employers do not need to offer coverage of elective abortions. However, all employer-sponsored health insurance plans offered nationwide must include coverage of abortion services and related medical procedures, should the mother’s health be endangered.
Many employers are considering adding abortion-related travel benefits to their plans. While this is generally permissible under federal law, adding a travel benefit is complicated and could lead to other legal risks and trouble for an employer plan. Considerations with adding travel benefits include, but are not limited to: (1) Who is eligible for the benefit under existing tax laws and the ACA? If an employer extends the coverage outside of the bounds of the traditional medical plan, they almost certainly would create a new group health plan subject to all ACA rules, HIPAA, and COBRA; (2) A benefit limited to just travel for services related to abortion could trigger mental health parity issues; (3) Travel reimbursement/claims procedures could be difficult to administer and subject to privacy concerns and record storage issues; (4) Design and administration issues for plans operating in multiple states in light of competing state laws; (5) Potential conflicts with plan illegal act coverage exclusions, depending on the state; (6) Depending on the state, concerns with potential charges of aiding and abetting; and (7) IRS tax limits on the cost medical travel.
Employers who offer coverage related to elective abortion services and/or travel costs, or simply extend coverage to situations when the life of the mother is endangered (as is required by the Pregnancy Discrimination Act) must ensure the privacy of protected health information. The federal Department of Health and Human Services (HHS) recently issued new health privacy guidance in response to questions about protecting the personal information of women seeking reproductive health services following the Supreme Court’s ruling. While it is geared towards individual women and healthcare providers, the HIPAA/HITECH privacy and data security requirements referenced also apply to brokers, health insurance carriers, and employers who sponsor self-funded health plans. Additionally, to abiding by all HIPAA/HITECH privacy and data security requirements, all employers need to be mindful that according to the Americans with Disabilities Act (ADA), any medical information about an employee in their possession needs to be stored entirely separately from the patient’s medical records.
GPAHU will continue to monitor this evolving situation and keep our members apprised of any significant new developments.
Important Transparency In Coverage Deadline for Group Health Insurance Plan Sponsors
A federal health insurance coverage price transparency rule took effect on July 1, 2022, for all non-grandfathered health insurance policies that have renewed between January 1, 2022, and July 1, 2022. So, it is important for GPAHU members to check in with any group plan clients who renewed their coverage during the first half of the year to make sure they have a compliance plan in place. For all other groups, the requirement will take effect upon their renewal later in 2022.
The regulation applies to health insurance carriers and almost every employer that offers group coverage, regardless of size of their company or the funding of their group plan. It requires all affected insurance carriers and group health plan sponsors to make machine-readable data files of health care price information available online. One file must contain all in-network provider negotiated rates, and the other historical out-of-network allowed amounts, all of which must be updated monthly.
Virtually all employers who offer group health insurance coverage to employees have responsibilities under this regulation. Employers who sponsor a fully-insured health insurance policy may contract with their carrier to fulfill the requirement and assume all compliance liability. However, there may be a charge for this service, and without a binding agreement with the insurer, the plan sponsor retains legal liability for compliance. Self-funded groups, including those employers who offer level-funded coverage, always retain compliance liability, and cannot shift it to a carrier or other third-party. They may contract with their third-party claims administrator or vendor to help them implement and maintain their machine-readable files and online posting responsibilities, but, it is the employer group plan sponsor’s job to make sure that their plan fully complies with the new requirements.
While a self-funded group can contract with a third-party to collect, post and maintain their data via the third-party’s website, self-funded and level funded groups must also post a link where their files are made publicly available on their own website. The link also cannot be behind any type of paywall or password screen, and the information and the link must be kept up-to-date.
Changes to PA Continuing Education Requirements for Brokers Licensed to Sell Annuities
Pennsylvania lawmakers recently finalized Act 99, which includes new continuing education requirements for any licensed Pennsylvania insurance agent or broker who has the authority to sell annuities. Agents and brokers with a Life & Health license have this authority. The law requires all insurance producers to complete a one-time training course that covers general annuity principles – including the types and uses of annuities, how annuity contract features affect consumers, and tax implications – as well as information about the new Best Interest standard of conduct, sale practices, and new replacement and disclosure requirements, among other requirements under Act 99. The specific training required depends on what prior training the producer has completed.
A licensed producer who has completed an annuity training under the prior annuity law (Suitability Standard or Act 48 of 2018) must complete either:
- A new one-time four (4) credit training course that meets the new annuity requirements under Act 99 and is approved by the Department and offered by an approved education provider.
- A one-time one (1) credit training course that covers the new annuity requirements under Act 99 and is approved by the Department and offered by an approved education provider. Licensed producers must complete this new training by December 20, 2022.
Any licensed producer who has not completed the required CE credits before June 20, 2022, must complete by December 20, 2022, the four (4) new credit training course that covers the new annuity requirements under Act 99 and is approved by the Department and offered by an approved education provider.
A licensed producer who has taken some but not all of the four (4) CE credit training courses by June 20, 2022, must complete the remaining CE credits by December 20, 2022, which should include the one-time (1) credit training course that covers the new annuity best interest standard requirement.
Check This Out!
If you want to expand your health policy knowledge beyond this newsletter, here is a resource to check out!
Employer-provided coverage delivers high-quality, affordable health care for more than half of all Americans. This infographic from America’s Health Insurance Plans includes all the details as to how.