The Fact of the Month
Here is something to mention when discussing cost and benefit trends with clients in the month ahead.
IRS Notice 2019-45 allows health savings account (HSA)-eligible health plans the flexibility to cover 14 medications and services used to prevent the exacerbation of chronic conditions prior to meeting the plan deductible. A 2021 Employee Benefit Research Institute (EBRI) survey of employers collected information on their response to the 2019 guidance and found that many employers added pre-deductible coverage as a result of the IRS notice. A recent EBRI report based on claims data from about 2 million HSA-eligible health plan enrollees confirmed the findings from the 2021 EBRI survey — fewer enrollees in HSA-eligible health plans have deductibles for services impacted by the IRS notice, and cost sharing has shifted from deductibles to copayments and coinsurance. The same shift was not observed for enrollees in other types of health plans. IRS Notice 2019-45 appears to have had a negligible impact on overall cost sharing as a percentage of total spending on a number of services impacted by the notice. This may be due to the fact that employers were more likely to change their cost sharing approach instead of eliminating it.
Source: Employee Benefits Research Institute, “Cost Sharing Shifted Away From Deductibles When Employers Added Pre-Deductible Coverage for Preventive Services in Response to Increased IRS Flexibility,” Fast Facts Brief, #480, September 7, 2023. Available online at: https://www.ebri.org/docs/default-source/fast-facts-(public)/ff-480-pdc-7sept23.pdf?sfvrsn=ba71062f_2
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!
PAHU Hosted Health Insurance Education Session for State Lawmakers
On September 6, 2023, our state chapter’s legislative committee hosted an online policy briefing for the members of the House Insurance Committee, the Senate Banking and Insurance Committee, and freshman state lawmakers. Over 40 legislators attended the online meeting, and the association received lots of good feedback and follow-up, both during and after the session. Topics addressed included: (1) an introduction of the association; (2) health insurance as a financial protection product; (3) the need to contain medical care costs long-term; (3) how people get health insurance coverage including the differences between group, individual and government-sponsored coverage; (4) the role of the broker and how we help our clients; (5) the various market segments of individual, small group, and large group coverage; (6) the differences between health insurance funding mechanisms—full-insured, level-funded, and self-funded coverage; and (7) health insurance consumerism. GPAHU leaders Vicky Cagliola and Alexis Bruni were amongst the presenters.
IRS Announces New and MUCH Lower Affordability Percentage for 2024
On August 23, 2023, the Internal Revenue Service (IRS) released Revenue Procedure Notice 2023-39 declaring the Affordable Care Act’s (ACA) coverage affordability percentage will be 8.39% of an employee’s household income for the 2024 plan year or almost ¾ of a percentage point less than in 2023. This change will significantly impact both applicable large employers subject to the ACA’s employer shared responsibility requirement (AKA the employer mandate) and their health insurance brokers.
According to the ACA, group coverage is “affordable” if an employee’s required contribution for the lowest-cost, self-only coverage option that meets federal “minimum value” standards does not exceed an annually indexed percentage of the employee’s household income. If a person has access to “affordable” group coverage, then they do not qualify for exchange-based individual coverage premium tax credits or cost-sharing subsidies. ALEs that offer affordable and minimum-value coverage to eligible employees eliminate their employer mandate penalty risk.
The dramatic drop in the 2023 affordability percentage, on top of last year’s almost 1/2 of a percentage point reduction from the 2022 rate of 9.61%, will be a big deal to most ALEs. Brokers will need to check planned 2024 contribution rates for all of their ALE group clients to see if they need to be increased. Furthermore, for all of those groups who have not set their contribution rates for the 2024 plan year yet, it will be critical to make sure that the rate for the lowest-cost minimum value plan offered meets the new and much lower employee cost threshold. Otherwise, ALE group clients could have significant penalty liability.
Upcoming Deadlines for Group Health Plans
Remember, there are some key compliance deadlines coming up for group health plans. If you have employer clients, make sure all of these items are your calendar. Also, proactively communicate all of these items to affected groups!
- MLR Rebates – Fully insured groups may be eligible for a medical loss ratio rebate from their insurance carrier. If so, the group should get their rebate by September 30, 2023. To avoid ERISA trust rules, the group should make plans to distribute the appropriate share of the money to affected 2022 plan year participants within three months of receipt.
- Medicare Creditable Coverage Notices— Group health plans that offer access to pharmacy benefits must notify all plan participants who are eligible for Medicare about whether or not their benefits are as extensive as the standard Medicare prescription drug plan before Medicare’s annual election period begins on October 15th.
- Update to Annual CHIPRA Notice – Group health plans need to distribute certain notices to plan participants annually, including one about premium assistance and the Children’s Health Insurance Program. The federal government revised its model CHIPRA notice for 2023-2024 and you can access it here.
- Upcoming Gag Clause Attestation Requirement—The Consolidated Appropriations Act, 2021 (CAA) prohibition the inclusion of “gag clauses” in provider contracts with insurers and group health plans. A gag clause would be a contract provision that directly or indirectly restricted the provision of provider-specific price or quality of care information or restricted the sharing of such information with an entity designated a business associate for HIPAA, HITECH, GINA OR ADA compliance purposes. Group health plan sponsors will need to formally attest that their plan network and provider contracts issued since 2021 do not include these provisions by December 31, 2023 through the federal Health Insurance Oversight System (HIOS system).
- Upcoming Plan Transparency Requirements—The federal Transparency in Coverage rules require non-grandfathered group health plans and health insurance issuers offering non-grandfathered group and individual health insurance coverage to make health coverage pricing, reimbursement, and cost-sharing information available to participants through an internet-based self-service tool and in paper form, upon request, before a participant actually received any services. Plans had to make this information available for 500 commonly covered services as of January 1, 2023. As of January 1, 2024, the online tool and paper requests must provide this data for all services covered by the health plan. Last year, there was an enforcement safe harbor for prices of bundled services and other covered items that are hard to price out individually. However, that enforcement safe harbor was recently removed. Similarly, the federal government recently lifted an enforcement safe harbor for issuers and plans regarding the machine-readable files of reimbursement data that each plan needs to post online. Last year, plans just had to post data in two machine readable files, one for in-network and one for out-of-network medical care reimbursement rates. Now, plans will need to post and maintain a third machine-readable file containing prescription drug negotiated rates and historical net prices.
Check This Out!
If you want to expand your health policy knowledge beyond this newsletter, here is a resource to check out!
The U.S. Census Bureau just released the latest national data on income, poverty and health insurance coverage rates amongst the American population. Dig into all of this data and the related insights, including the latest uninsured rate of 7.9% of the population, here!