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.
Despite recent regulations to ensure consumers have access to the true cost of their medical care, research shows that most Americans may not be currently using the data. According to a survey conducted in March of 2022 and released in early October, two-thirds (64%) of the more than 2,000 Americans questioned said they have never tried to find the price of a healthcare service. Thirty-six percent of respondents have researched healthcare prices, and younger adults between ages 18 and 34 were more likely than older adults (55+) to do so—55% versus 27%, respectively.
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!
Federal Regulation To End Family Glitch Could Impact 180K Pennsylvanians
The Biden Administration just finalized a regulation that will allow dependents offered “unaffordable” family or dependent coverage through an employer group plan to potentially qualify for premium tax credits to purchase individual health insurance through health insurance exchange marketplaces. The rule will take effect on January 1, 2023, and according to the Pennsylvania Health Access Network, about 180,000 Pennsylvanians, most of whom are low-income women and children, may qualify to purchase subsidized individual coverage through Pennie, Pennsylvania’s state-run exchange. For the purposes of this rule, “unaffordable” coverage is defined as family or dependent coverage premiums exceeding 9.5% of the family income, as adjusted annually for inflation.
Importantly, the new rule does not affect how employers calculate “affordability” for the purposes of employer mandate compliance and Affordable Care Act (ACA) reporting. For employer-based coverage offerings to employees, affordability (and exchange subsidy eligibility) will continue to be based on the cost of the single employee rate for the lowest cost minimum value premium offered by the employer, regardless of what the employee and their family elects for coverage. Applicable large employers (ALEs) may continue to rely on existing “affordability safe harbors,” and they also do not need to offer “affordable coverage” to dependents.
The Biden Administration also notes that this policy change will not impact ACA employer reporting requirements and forms. ALEs will not need to add their premium rates for family and dependent coverage to Forms 1094 and 1095-C. The health insurance exchanges will instead verify subsidy eligibility through information dependents provide on their coverage applications. Enrollers certified to help consumers purchase coverage through the federal health insurance exchange marketplace will get training on the new rule to make sure that applicants effectively weigh the advantages and disadvantages of splitting a family between employer-based and exchange-based coverage.
To ensure that people in group plans whose open enrollment periods do not align with health insurance exchange open enrollment periods can qualify to leave their group coverage mid plan year, the IRS issued Notice 2022-41. This guidance allows employers to amend their Section 125 “cafeteria plans” to make enrolling in subsidized exchange-based coverage a qualifying event for dependents. If an employer decides to amend their Section 125 plan, they need to inform their employees of the change and adopt a formal plan amendment. The plan amendment can be retroactive back to the first day of the plan year, and it must be made by the last day of the Plan year in which the new qualifying events are allowed. For 2023 only, plans have an extra year to formally amend their Section 125 document.
PA Insurance Department Releases 2023 Small Group and Individual Health Insurance Rates
The Pennsylvania Insurance Department (PID) recently announced the final approved small group and individual health insurance rates for 2023. The state-wide average rate increases for 2023 are lower than was predicted earlier this summer when insurance carriers filed their original product offerings for PID approval. According to the PID, the statewide average increase for fully insured small group premiums will be 5.3%. In the individual market, coverage will be offered in all 67 counties and individual consumers will pay an additional 5.5% more in premiums in 2023.
The PID credits the federal extension of enhanced exchange-based individual market premium tax credit funding, as well as the state’s reinsurance pool for the lower premiums, particularly in the individual market.
PA House Passes Cybersecurity Legislation That Would Impact Insurance Agents and Brokers
The Pennsylvania State House of Representatives recently passed legislation to address cybersecurity breaches that impact in the insurance industry in the Commonwealth, including health insurance agents and brokers. House Bill 2499, or the Pennsylvania Insurance Data Security Act, creates standards to mitigate damages to consumers caused by an insurance data breach. Pennsylvania-based insurers would be required to annually certify to the Pennsylvania Insurance Department how they comply with the law. If a cybersecurity event (as defined under the legislation) has or may have occurred, covered entities (including agents and brokers) must notify the insurance commissioner within five business days and conduct a prompt investigation intended to correct the issue and prevent future cyber breaches.
The legislation is currently pending in the Pennsylvania Senate, where it is expected to pass before the end of October. Since it is endorsed by the PID, Governor Wolf will likely sign the measure. Our state chapter, the Pennsylvania Association of Health Underwriters, has been monitoring this legislation closely and will provide details to members if it becomes final law. The measure is based on a model law adopted by the National Association of Insurance Commissioners, and 18 other states have similar measures in place.
Check This Out!
If you want to expand your health policy knowledge beyond this newsletter, here is a resource to check out!
The Rand Corporation’s COMPARE model is a microsimulation that predicts the effects of health policy changes at national and state levels. The model takes a synthetic data set with information on a nationally representative sample of individuals and their employers and predicts how they will react under different policy scenarios. Check it out!