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.
Mothers are more likely to be the provider of group coverage for the whole family and are replacing fathers as the providers of family coverage. On the other hand, group policy-holding rates have been steady for both childless men and women.
Source: Eden Volkov, EBRI Issue Brief, “The Dynamics of Health Insurance Within Families: 2012-2021”
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!
New PA Law Updates Prior Authorization, External Review, and Emergency Care Requirements
On November 3, 2022, Pennsylvania Governor Tom Wolf signed S.B. 225 into law as Act 146. The intent of the new law is to speed up the prior authorization process for consumers and place more controls over the use of step-therapy. The measure only applies to fully insured health insurance coverage offered in the Commonwealth. It will require health insurers and managed care entities, as well as the state Medicaid and Children’s Health Insurance Programs (CHIP), to handle prior authorization requests consistently and transparently. It also prevents health insurers from requiring prior authorization for any type of emergency care and requires health insurers to cover Federal Drug Administration (FDA)-approved medications to treat substance use disorders without requiring prior authorization.
Another aspect of the new law brings control of the external review process for fully insured health plans back to the Pennsylvania Insurance Department. The Affordable Care Act preempted state authority over the external review process, but by passing this legislation, Pennsylvania becomes the 45th state to regain control over independent reviews of health coverage decisions. Now, the state Insurance Commissioner will have oversight over the process for independent appeals of adverse benefit determinations, including any review of prior authorization denials. The major provisions of S.B. 225/Act 146 will take effect on January 1, 2024.
PA Poised for Divided Government
While it is still not completely official it appears that the Democrats will control the Pennsylvania House chamber during the upcoming legislative session, by a potential 102-100 majority. Meanwhile, Republicans maintained control of the Senate chamber, with a 28-22 majority, and Democrats Josh Shapiro and Austin Davis were elected Governor and Lieutenant Governor.
The PA Senate held its legislative leadership elections today, and the results are below.
Senate Republican Leadership:
Interim President Pro Tempore: Kim Ward (R-Westmoreland)
Leader: Joe Pittman (R-Indiana)
Whip: Ryan Aument (R-Lancaster)
Appropriations Chair: Scott Martin (R-Lancaster)
Caucus Chair: Kristin Phillips-Hill (R-York)
Caucus Secretary: Camera Bartolotta (R- Washington)
Senate Democratic Leadership:
Leader: Jay Costa (D-Allegheny)
Appropriations Chair: Vincent Hughes (D-Philadelphia)
Whip: Anthony Williams (D-Philadelphia)
Caucus Chair: Wayne Fontana (D-Allegheny)
Caucus Secretary: Maria Collett (D-Montgomery)
While House Democrats have publicly declared their control of the chamber for the next legislative session, both parties have postponed leadership elections until Democrat victories in races in the 151st and 146th legislative districts are made official.
Complicating matters are three open House seats. Democratic Representatives Austin Davis and Summer Lee were reelected to their PA House seats, but also elected Lieutenant Governor and federal Representative for the 12th Congressional District, respectively, so they will need to resign. Also, Democratic Representative Anthony DeLuca died suddenly just before the election, so his name remained on the ballot. Special elections to fill these House seats will need to occur before May 2023. Until then, the razor-thin margins mean every vote will help legislators prepare to pick a Speaker to preside over the chamber and set the rules for the coming session. To maintain full control until the special elections are held and decided, House Democrats will need to secure the votes of a few Republican representatives to elect a Speaker. House members will be sworn in on January 3, 2023, with the Speaker’s election to occur then.
Federal Regulators Release 2023 PCORI Fee and 2023 Employee Benefit Plan Limits
The Internal Revenue Service recently released the 2023 inflation-adjusted limits for various employee benefit options, including the health flexible savings account (Health FSA) contribution and carryover limits. The limits are addressed in Revenue Procedure 2022-38, and the chart below outlines the changes addressed in the notice and how the new limits compare to 2022 levels.
|Maximum Annual Employee Contribution to a Health FSA||$2,850||$3,050|
|Health FSA Carryover Limit||$570||$610|
|Adoption Assistance Programs||$14,890||$15,950|
|Maximum Annual Employer Contribution to Qualified Small Employer HRA (QSEHRA)||$5,450 (self-only coverage) $11,050 (family coverage)||$5,850 (self-only coverage) $11,800 (family coverage)|
|Maximum Monthly Benefit for Qualified Transit Passes, Van Pool Services, and Qualified Parking||$280||$300|
In addition, IRS Notice 2022-59, explains that the Patient-Centered Outcomes Research Institute (PCORI) fee for plan years that end between October 1, 2022 and September 30, 2023 will be $3.00. This is an increase from the $2.79 payment for policy or plan years that ended between October 1, 2021, and September 30, 2022.
The PCORI fee is charged to all group health insurance plans and assessed on a covered life basis, not on an employee basis. Self-funded plan sponsors are responsible for calculating and paying their own fee using IRS Form 720. The fee is due by July 31 of the calendar year immediately following the last day of the plan year, meaning that payments for plan years that end in 2022 will be due in July of 2023. Employers who sponsor plans with fully insured group coverage can generally rely on their health insurance carrier to calculate and pay the fee on their behalf. However, employers who offer health reimbursement arrangements (HRAs), including HRAs that are integrated with a fully insured group policy are required to pay the fee on behalf of each employee covered by the HRA.
The PCORI fee varies based on the start of each employer group’s plan year. The chart below shows the fee employers will need to pay for each covered life in 2022:
|2022 PCORI Filing Fee Calendar|
|Plan or Policy Year||PCORI Filing Fee|
|February 2021 – January 2022||$2.79|
|March 2021 – February 2022||$2.79|
|April 2021 – March 2022||$2.79|
|May 2021 – April 2022||$2.79|
|June 2021 – May 2022||$2.79|
|July 2021 – June 2022||$2.79|
|August 2021 – July 2022||$2.79|
|September 2021 – August 2022||$2.79|
|October 2021 – September 2022||$2.79|
|November 2021 – October 2022||$3.00|
|December 2021 – November 2022||$3.00|
|January 2022 – December 2022||$3.00|
Check This Out!
If you want to expand your health policy knowledge beyond this newsletter, here is a resource to check out!
The Kaiser Family Foundation recently published an issue brief explaining the federal legal challenge to the ACA’s preventive health care services requirement. This provision of the ACA, which requires all non-grandfathered health plans to cover many services classified by the federal government as “preventive care” on a first-dollar basis. While very popular, this section of the ACA is currently subject to a federal court challenge that could potentially up-end the requirement. The issue brief explains exactly why, “if the final decision for this case be found in favor of the plaintiffs, and applied nationwide, then millions of people may be vulnerable to loss of guaranteed coverage of preventive services without cost sharing.”