However, if “the past is prologue,” then the considerable
amount of new legislation passed in recent months affecting employer health
plans may provide a clue. The last few months have seen the enactment of a
head-spinning array of new federal legislation affecting group health plans.
This is a major change from prior periods in which the states were left to
regulate insurance, but self-insured plans were generally free of government
regulation.
The recently enacted legislation appears to be the
beginning of a trend in which the federal government is using the existing
system of employer-provided health care to provide additional benefits to the
uninsured and the under-insured. In addition, the federal government is
increasing oversight of health plans and imposing additional compliance
burdens. If these programs appear to be successful in meeting their goals – and
it is far from clear right now that they will be – then it seems likely that
Congress will continue to add more requirements for employer-sponsored health
plans.
Here is my list of the new laws affecting health plans
based on approximate order of effective dates for calendar year plans. This is
not intended to be a detailed summary of these laws which, in many cases, are
extremely complex. Rather, I am just trying to provide a flavor of the breadth
of new laws affecting group health plans and a sense of how the landscape for
these plans has changed.
Subsidized COBRA benefits (effective March 1, 2009)
This was part of the American Recovery and Reinvestment
Act of 2009 (ARRA), the economic stimulus legislation enacted this past
February. In order to provide health benefits to individuals who had lost their
jobs, Congress provided a 65 percent subsidy for up to 9 months for the cost of
COBRA premiums so that terminated employees could purchase coverage from their
previous employers. Congress had recognized what employers had known for a ling
time—that COBRA had become too expensive for most unemployed individuals to
elect. Therefore, rather than providing some type of government health plan to
the unemployed, Congress put the obligation on employers to provide this
benefit and to notify employees that it was available. Although employer health
plans will provide the benefits, the government will reimburse employers for
the subsidy through the payroll tax system.
HIPAA privacy increased requirements
As part of the ARRA, Congress enacted additional HIPAA
privacy requirements including higher penalties for privacy violations which
are effective currently and notice requirements for breaches of HIPAA
violations. These provisions affect both health plans and health providers. The
ARRA HIPAA provisions have various effective dates, including some provisions
that were effective on enactment.
Children’s Health Insurance Plans (effective April 1,
2009)
Congress provided funding for state programs to subsidize
employee purchases of health insurance for children. As part of the new law,
employers must provide special enrollment rights to children of employees
entitled to receive these subsidies. Employers will also have to provide
notices to employees explaining the availability of these new subsidies when
the government agencies provide a format for this notice.
Medicare secondary payer reporting requirements
(effective July 1, 2009)
Self-insured employers will have to provide substantial
additional reporting to CMS to assure that the government is not paying more
than it should for Medicare eligible plan participants, although much of the
burden will fall on the third party administrators. In order to satisfy these
requirements, self-insured employers will need to collect the Social Security
numbers from many dependents covered by their plans even if no one in their
families is currently eligible for Medicare.
Mental health parity act (effective 2010)
This law is designed to prevent large group health plans
from placing annual or lifetime dollar limits on mental health benefits that
are lower than the annual or lifetime dollar limits for medical and surgical
benefits.
“Michele’s law” (effective 2010)
College students who are entitled to medical coverage
under their parent’s plan, but who go on medical leave and would otherwise lose
coverage because they cease to retain student status, must be allowed to
continue coverage while on leave for up to one year.
Genetic Information Non-discrimination Act (effective
2010)
Employers and health plans are prohibited from
discriminating against plan participants with respect to coverage and other
matters based on genetic information. The law is designed to protects Americans
from being treated unfairly because of differences in their DNA that may affect
their health.
This is a lot for administrators of employer group health
plans to handle all at once. In addition, it is happening as the President and
Congress keep talking about comprehensive health care reform. Among the
possibilities being discussed is a federal medical insurance plan that would
compete with private providers. Another possibility is mandated employer health
coverage for all employers with a federal program for the unemployed. At this
point, no one can predict what health reform will look like. However, the
enactments of recent years are strong evidence that Congress appears to favor
more mandates on employers.
Tax law changes
Whatever form health reform takes, it is clear that it
will result in additional government expenditures at least for individuals who
currently have no coverage. Already, a variety of changes to the tax law
relating to health care are being debated by the Senate Finance Committee.
Among the proposals are:
· Changing the tax exclusion for employer
provided health care
At the present time the value of
nearly all employer provided health care is excluded from gross income for
federal income tax purposes. Congress is considering limiting the tax exclusion
for health care based on the value of the coverage or the income of the
recipient. Other options would be to provide an individual deduction or tax
credit. Some in Congress claim the exclusion causes employers to provide overly
rich benefit plans, a claim most employers would dispute. Congress has talked
about this before, but a significant impediment to taxing health coverage is
that is very difficult to value the coverage provided by a self-insured health
plan.
· Modifying Health Savings Accounts
Individuals enrolled in high
deductible health plans can establish health savings accounts for paying
medical expenses. Contributions up to a statutory limit are deductible for tax
purposes and amounts expended for health care are not taxable. Congress is
considering limiting the HSA contribution to the actual deductible, imposing
greater penalties for non-medical withdrawals and requiring independent
certification that the amounts were expended for medical purposes. Although
some have regarded these accounts as “tax shelters” for wealthier employees,
they may provide one of the best opportunities for controlling costs by giving
the consumer more say over how some of his or health care dollars are spent.
· Modifying Flexible Spending Accounts
Congress is considering either
limiting the amount that can be contributed to health FSAs or eliminating them
entirely.
· Reducing tax benefits for Blue Cross,
Blue Shield and similar organizations
Currently, these organizations
enjoy tax benefits that are not enjoyed by other insured health plan providers.
Congress is considering limiting or reducing these tax benefits.
The recent past has seen a large increase in the amount of
federal regulation of group health plans. The only safe bet right now is that
this trend is very likely to continue and intensify in the coming years.—E.B.N.
