Employer Healthcare Congress (4). Things you need to know about US healthcare reform but were afraid to ask..

Or maybe the subtitle should be – a layman’s summary of notable facts about the Patient Protection and Affordable Care Act (PPACA)

A fairly large chunk of my time at the Employer healthcare Congress was spent updating myself on the PPACA. A hot topic at last year’s conference, Obama’s controversial reforms are still occupying a great deal of energy, time and money for providers and employers. These are some of my jottings following two excellent sessions run by an impressive team of experts:

Anne Wilde, Attorney and Principal, The HR and Benefits adviser PLLC

Ben Conley, Attorney, Seyfarth Shaw LLP

Michelle Hicks, Director, Communications Buck Consultants

The pearls of wisdom below are all credited to these three experts and the reason they win my prize for ‘most informed presentation’ is not only due to their clear explanations of a complex subject but because they were the only team to provide handouts. This considerably eased the pain for all concerned.

The aim of the PPACA:

To ensure that an additional 32 million Americans will receive healthcare cover. By 2014 the structure of US healthcare will have changed to offer three options:

·      State funded health exchanges (comparing different rates from different insurers and qualifying for tax credits) and taken out by individuals who ‘opt out’ or are ineligible for employer co-funded cover.

·      Individual mandate – an individual must purchase health insurance or face penalties

·      Employers are ‘mandated’ to offer ‘minimum essential coverage’ (applies to all organisations employing 50 or more full time equivalent staff). They will be fined for non-compliance ‘play or pay’

It is highly likely that the PPACA is here to stay:

Challenges to this act will face the Supreme Court within the next 12 months to decide if any element of the legislation is unconstitutional within the next 12 months. For now – it is the law of the land and the smart money is that if it gets repealed, this will be a political, not constitutional decision. With elections next year – this reform could become an interesting political pawn. (Very similar to the way that NHS reforms in the UK are becoming more political by the minute)

Deadlines count:

By December 23^rd every self funded group plan MUST have two IRO’s (independent review organisation) contracted to review claims.

Modifications to rules and regulations MUST be communicated to members 60 days in advance.

Initial Benefit determination for a claim on a group plan MUST be completed within 72 hours.

There are many other deadlines written into the Bill.

Grandfathering status is key:

Full comprehension of your Grandfathering status is vital. My English and European readers will think I’m talking about extended families, but no, as those of you in the know are aware – a Grandfathered plan can be described as follows:

A Grandfathered plan is a group plan that provides medical care to employees or their dependants directly or through reimbursement or otherwise, in place on March 23^rd 2010. These plans must still comply with minimum cover requirements. These requirements include cover for ‘adult child’ coverage, no lifetime limits, no pre-existing condition exclusions for children under 19 etc etc)

However, if your plan is ‘grandfathered’, then other mandates imposed by the PPACA do not apply. Changes in regulations, cover levels or other aspects of your plan could lead to loss of grandfathered status and exposure to the new regulations.

Still with me?

Fines will be applicable for non-compliance but no-one is sure how these will be monitored and administered.

If an employer fails to over health cover to staff they will be subjected to fines of up to $3000 per employee.(less the first 30) It is expected that some organisations may decide to take this risk – after all – standard cover can run to at least $5000 per year per employee.

Cover offered by employers must be deemed as ‘affordable’. (‘not exceed 9.5% household income) It has not been agreed yet how ‘affordable will be decided’. Means tests will be invasive and impractical and it’s expected that base salary will be used as a measure.

Providing cover levels or elements of a plan that do not comply with the PPACA will result in a fine of $100 per employee per day.

It is therefore cheaper (penalty wise) to fail to offer cover than to provide non compliant cover.

Confused? I am. Which leads to the most important nugget of all..

Appoint an expert!:

Legal counsel is highly recommended (two fantastic attorneys listed above). This law is complex and at times ambiguous. Large penalties may apply for non-compliance, even if your non-compliance is unintentional. The reforms are restrictive, prescriptive and unforgiving in many aspects.

If I had the time – or inclination – it would be interesting to see how many times the words ‘MUST’ or ‘Mandatory’ appear in the PPACA. Instead – I am happy to leave the legal interpretation to the experts…. And thank my lucky stars that the the UK state funded NHS is quite simply ‘free at the point of delivery’.

For now……