Will the Supreme Court take up health reform in its next term?

It is generally accepted that the issue of the constitutionality of the health reform law and the individual mandate will be decided by the U.S. Supreme Court. The only real question has been when that will be.

Now it looks as if it will be during the Court's next term, which begins next week. That means oral arguments by March, and a decision by June – during the 2012 presidential campaign.

On Wednesday, the Justice Department petitioned the Court to hear what is probably the key case concerning the health reform law: the case filed in Florida by 26 state attorneys general and the National Federation of Independent Business (NFIB). A federal judge in Florida ruled in January that the individual mandate was unconstitutional and struck down the whole law. In August, a three-judge panel from the Eleventh Circuit Court of Appeals in Atlanta agreed 2-1 that the mandate was unconstitutional, but did not agree that meant the entire reform law should be struck down.

After losing in the Eleventh Circuit, the Obama administration had two choices on how to proceed: go back to the Eleventh Circuit and ask for an "en banc" (entire court) hearing, or head directly to the Supreme Court. Because of the makeup of the appeals court, a ruling by all the judges probably wouldn't have differed from the ruling of the panel of three, so the administration probably would have lost again and had to appeal to the Supreme Court anyway. But it was widely believed that the Justice Department might go through the process anyway, to slow down this high-profile case's journey and make it more difficult for the Supreme Court to rule before the 2012 election. An after-election ruling would probably be better for the Obama administration than a ruling next summer, since a win would energize Republican opponents, and a loss would invalidate what is commonly seen as the President's signature achievement.

In a statement, the Justice Department said, "The department has consistently and successfully defended this law in several courts of appeals, and only the Eleventh Circuit Court of Appeals has ruled it unconstitutional….Throughout history, there have been similar challenges to other landmark legislation such as the Social Security Act, the Civil Rights Act and the Voting Rights Act, and all those challenges failed. We believe the challenges to the Affordable Care Act…will also ultimately fail and that the Supreme Court will uphold the law."

It was a busy day at the Supreme Court. Earlier, the NFIB had filed its own appeal of a portion of the Eleventh Circuit's ruling. The NFIB's petition says the Court should strike down the whole reform law because the individual mandate cannot be separated from the rest of the law. "Until this court decides the extent to which the ACA survives, the entire nation will remain mired in doubt, which imposes an enormous drag on the economy," the NFIB petition argues. "Individuals, employers and states will lack a firm understanding of their rights and duties when planning their affairs. Providers of health insurance will have no idea what rules will govern their industry. Government officials will not know what regulatory measures need to be developed."

A little later, the 26 states also filed a petition. "Time is of the essence," wrote former Solicitor General Paul Clement, who is representing the 26 states. "The grave constitutional questions surrounding the ACA and its novel exercise of federal power will not subside until this court resolves them."

Meanwhile, last week, another challenge to the reform law was heard by a panel of judges of the Court of Appeals for the District of Columbia Circuit. It is unclear when a decision will come in that case.

So far one appeals court (Cincinnati) has said the individual mandate is constitutional, one (Atlanta) has said it is unconstitutional, and a third (Richmond) dismissed a case saying that the penalty for not having insurance is a tax, and tax provisions cannot be challenged until the tax is actually paid (which won't be until 2014).

The national agenda

The deficit-cutting work of the super committee and the President's proposals for cutting the deficit are absorbing a lot of the energy in Washington. Still, two other important health-related issues are also on the agenda this fall. They include:

The "doc fix"—The latest patch for the broken Sustainable Growth Rate formula expires at the end of the year. Unless Congress acts, the fees for doctors treating Medicare enrollees will decrease by 29.5 percent. Almost no one believes cutting physician fees to that extent is a good idea, but the problem is that repeal or even a long-term patch would cost about $300 billion. Proposals floated to fund the "doc fix" include elimination of the quality bonus payment demonstration for Medicare Advantage plans, which was enacted as part of the health reform law to offset overall payment reductions.

The question of who will run the Centers for Medicare and Medicaid Services (CMS) – The recess appointment of CMS Administrator Don Berwick also expires at the end of the year, and Senate Republicans have said they will block his permanent appointment. Will the Obama administration find some kind of work-around? Or will Berwick be replaced?

Meanwhile, here's a high-level look at the early stages of the deficit-cutting work.

The super committee at work

The Joint Select Committee on Deficit Reduction – or, as it's more commonly called, the super committee – has now had several closed-door and several public meetings. No one is revealing much of anything – for example, after one closed-door meeting last week, the panel's co-chairs, Sen. Patty Murray, D-Wash., and Rep. Jeb Hensarling, R-Tex., said only that the 12-member group was making progress.

"We had a very productive conversation today," Murray said. "Clearly, we all understand the tremendous time challenge in front of us and the tremendous challenge on the part of our country today for us to come to an agreement. We had a great discussion today to begin to frame that."

Hensarling said, "Every day that the committee meets, I believe there is progress."

Still, their job seemed to be made harder when the President and House Speaker John Boehner (R-Ohio) made conflicting demands. In a speech last week, Boehner said that tax increases should not be a part of the deal. Obama, however, promised to veto any deal that includes entitlement cuts but no new revenue from high-income Americans.

The President's deficit-reduction proposals

Last week, President Obama announced his proposals for cutting the deficit. They include collecting $1.5 trillion in additional revenue and saving $1 trillion by scaling back military operations in Iraq and Afghanistan. In addition, here are some of his notable proposed health care savings:

Cuts of $248 billion in Medicare growth in the next decade, and $72 billion in Medicaid growth

Starting in 2017, new beneficiaries would pay higher deductibles before Medicare coverage of doctors' services and other outpatient care kicks in ($25 more in 2017, 2019 and 2021).

Higher-income beneficiaries would pay higher premiums for Medicare Parts B and D, and the income threshold would be frozen so more people would have to pay the surcharge. (About 5 percent of people with Medicare now pay the higher premiums. The proportion would grow to 25 percent.)

Starting in 2017, new enrollees would pay co-payments for home health care that is exempt from co-payments now.

"Medigap" supplemental insurance premiums would increase.

Drug manufacturers would have to give Medicare additional discounts for prescription drugs bought by low-income beneficiaries.

Starting in 2015, the ability of states to use Medicaid provider taxes to increase federal matching funds would be phased down.

The formula for calculating Medicare payments to the states would be revised.

Starting in 2013, Medicare payments to hospitals for bad debts would be reduced. and so would payments to teaching hospitals.

The Independent Payment Advisory Board, whose powers have not yet gone into effect, would be strengthened.

In general, the response to the President's proposals has not been positive from either the Democratic or Republican side. The executive director of the progressive group Families USA said the plan "shifts the burden to states and ultimately onto the shoulders of seniors, people with disabilities and low-income families who depend on the program as their lifeline." A senior vice president of the American Hospital Association said the proposals were "disappointing and aren't helpful in terms of moving forward." Sen. Pat Toomey, R-Penn. and a member of the super committee, said, "With the deadline looming, we do not have time to waste on political games and pushing big tax increase that will only make our economy weaker."

Jacob Lew, director of the White House Office of Management and Budget, was one of the few who publicly defended the proposals, saying, "If you look at the details of what's in the plan that the President is sending to Congress, there is a lot of pain, and it's spread – it's spread broadly and, we think, fairly."

Challenge: Duals

The issue of cutting the health care costs of dual eligibles – that is, people who qualify for both Medicare and Medicaid benefits – is getting a lot of attention right now. But for years, members of Congress and health policy experts have struggled to deal with the interplay of the two government programs, as well as attempts to reduce spending and ensure quality of care. Sen. Ron Wyden, D-Ore., highlighted this history during a Senate Finance Committee hearing on the subject last week. "We have been treading water on this issue literally for decades, when I had a full head of hair and rugged good looks, and I was a director of the Gray Panthers," he said, recalling discussions 30 years ago.

The pressure to cut the deficit and health care costs has renewed interest in the issue. Dual eligibles are some of the states' most expensive, chronically ill patients. They account for 16 percent of all Medicare beneficiaries, but 27 percent of the spending. They account for 15 percent of all Medicaid beneficiaries, but almost 40 percent of Medicaid spending.

At the hearing, the only witness was Melanie Bella, the director of the new Medicare-Medicaid Coordination Office. She pointed to coordinated care arrangements as a key element in controlling costs and promoting better care for dual eligibles. She said that of the 9 million duals, only 100,000 are currently in coordinated care programs (through either a Medicaid managed care arrangement or Medicare Advantage-type arrangement). Her office's goal is to get one million into coordinated care in 2012, then build on that progress.

To that end, states have until Oct. 1 to submit letters of intent for demonstration projects on aligning their Medicare and Medicaid payment systems. Fifteen states have already received grants of up to $1 million to test their own care-coordination programs, which vary in the way they integrate payments and contract with different types of private health plans.

Meanwhile, a new report commissioned by the industry group America's Health Insurance Plans and written by Kenneth Thorpe, professor of health policy at Emory University, has found that as much as $125 billion could be saved over the next decade by enrolling dual eligibles in team-based coordinated care programs. Here are some more of the report's findings:

"Over half of all dual eligibles are under treatment for five or more chronic conditions."

"Some of these conditions, including diabetes, pulmonary disease and hypertension, are potentially manageable."

"Current Medicare and Medicaid policies provide little incentive for the states to rely on health plans and team based care programs."

Thorpe proposes that states enroll every dual in a health plan (but give them the choice to opt out), let health plans design their own evidence-based approaches (must include preventive care, transitional care, medication management, and other specific functions), and make health plans responsible for "coordinating, integrating and developing each of the care-coordination functions."

"States could also contract with other entities such as community health teams or other forms of medical homes."

The paper concludes, "Expanded reliance on health plans and other coordinated care approaches for dually eligible beneficiaries can achieve significant savings while improving quality of care….Policymakers should seriously consider greater reliance on these strategies as action on deficit reduction initiatives moves forward."

What health insurance data will do

For the first time, private sector health insurance claims data will be available just as Medicare claims data is available to policymakers, regulators, researchers, analysts and consumers. Humana and three other health insurance companies – Aetna, Kaiser Permanente and UnitedHealth care – have agreed to supply their claims data to the newly formed Health Care Cost Institute, an independent, nonprofit entity "committed to creating the nation's most comprehensive source of information on health care costs and utilization, and promoting research on the drivers of escalating health care costs and utilization in the U.S." The data, of course, will be de-identified. It will include more than 5 billion medical claim records representing more than $1 trillion of health care activity from more than 5,000 hospitals and a million service providers from 2000 through the present. And it will be updated regularly to ensure its usefulness.

HCCI's mission is to promote independent research and analysis on the causes of rising health spending, to provide more transparent information on what is driving health care costs, and to help the nation get greater value from its health spending.

The institute's governing board is made up of national physician leaders and academic researchers, many of them well known, including Jonathan Gruber, a health care economist at MIT, Harvard Provost Alan Garber, Harvey Fineberg, president of the Institute of Medicine, and Elizabeth Nabel, president of the Brigham and Women's/Faulkner Hospitals.

Starting in 2012, the institute hopes to produce scorecards of trends in health care utilization and cost.

Steep cost climb in 2011

The Kaiser Family Foundation's annual survey of employers' spending for health care coverage showed the average cost of a family plan increased 9 percent this year, to $15,073 – three times the growth in 2010. Coverage for single employees grew 8 percent, to $5,429.

Workers paid an average of $921 toward the premium of single coverage and $4,129 for family plans.

The survey also shows the cost of family coverage has more than doubled since 2001, when premiums averaged $7,061 (this is compared to a 34 percent gain in wages over the same period).

The survey includes data on both fully-insured and self-funded plans. It shows that 60 percent of covered workers are in partially or completely self-funded plans, a trend that has been increasing. (Note: The fact that premiums are increasing for both fully-insured and self-funded employer plans is evidence that these increases are being driven by rising claims costs.)

Half of workers at small firms with individual policies now have annual deductibles of $1,000 or more, compared with 16 percent in 2006. At large firms, the share has grown from 10 percent to almost a third.

Employers are mainly coping with rising health-care costs by moving their workers into plans with higher out-of-pocket costs like deductibles, co-pays, and co-insurance.

The political arguments over health reform's contribution to the cost increases are already starting. In the past year, some new mandates have gone into effect, such as the requirement for new plans to offer preventive care without cost-sharing and for children to be able to stay on their parents' health plans until age 26. The Kaiser survey showed that about a quarter of people with employer-sponsored plans gained the preventive-care benefit last year.

Karen Ignagni, CEO and president of America's Health Insurance Plans, said, "This report is just the latest warning that far more needs to be done to address the rising cost of health care. Policymakers in Washington and the states need to focus on all of the factors that are driving premium increases: soaring prices for medical services, changes in the covered population that has resulted in an older and sicker risk pool, and new benefit and coverage mandates that add to the cost of insurance. Reducing health care cost growth will make it easier for consumers and employers to afford coverage, ease the burden on federal and state budgets, and put our vital safety net programs on sustainable and fiscally responsible paths."

Meanwhile, early responses to an annual survey released by the benefits firm Mercer last week say that per-employee health care benefit costs will increase 5.4 percent in 2012, the smallest increase Mercer has seen in 15 years. Employers surveyed said they have been trying to contain costs by raising deductibles, increasing employee contributions, and moving employees to lower-cost health plans. They also reported that if they made no changes to their plans, their benefit costs would increase by 7.1 percent instead.

More grants to states for rate review

Last week, the Department of Health and Human Services awarded $109 million in grants to 28 states to help them strengthen their rate review processes. HHS already had awarded $46 million to 45 states and D.C. a year ago.

The health insurance industry group AHIP responded in a blog post, "Highly publicized provisions such as premium rate review may make for good sound bites, but literally do nothing to address the soaring cost of medical care." Robert Zirkelbach, an AHIP spokesperson, said, "The current focus on rate review ignores the soaring cost of medical care that is driving up the cost of coverage and taking up a greater and greater share of federal and state budgets."

Steve Larsen, director of the Center for Consumer Information and Insurance Oversight, said that the rate review process "at a minimum" ensures that premiums "really reflect underlying costs."

Meanwhile, an analysis of government data by AHIP shows that premium increases rose in direct proportion to health care cost increases from 2000 to 2009.

Health reform briefs

Two surveys – one by the government and one by Gallup – show that the number of young adults 19-25 covered by insurance has grown by about a million since a provision in the health reform law allowing them to stay on their parents' policies took effect.

The Kaiser Family Foundation has released a 50-state survey that provides a comprehensive look at state Medicaid managed care programs. The survey found that two-thirds of Medicaid enrollees nationally are in comprehensive managed care programs. It also documents their diverse approaches.

The National Association of Insurance Commissioners wrote a letter last week to the super committee, asking members to not prohibit first-dollar coverage in Medigap supplemental insurance policies as some deficit-cutting groups have recommended. They said that change would be disruptive to seniors, particularly if it was applied to existing policies.

The Institute of Medicine says that on Oct. 7, it will announce its recommendations on "essential health benefits" to the Department of Health and Human Services. The essential health benefits package that is then determined by HHS will be the minimum health insurance plan offered in state-based health exchanges beginning in 2014.

Why Combine Policies?

If you Combine your Policies, you save.  Here's how....

You have a number of polices that protect the precious facets of your life. Home, auto, life – you have all your bases covered. Now, if you haven’t considered it before, you may want to consider it now: combining your policies.


At Winthrop & Gray Company, we can combine your policies and even reduce your monthly premium. Just think, less hassle, less paperwork, and a nifty discount.
Contact us today – or fill out online contact form – to get the details!

Winthrop & Gray’s Health Care Reform reminders

2011
Insurance Reforms

New uniform coverage documents and standard definitions developed (applicable in 2012).

Minimum medical loss ratios required.

Medical Reforms

Medicare Advantage cost-sharing limits take effect.

Medicare beneficiaries who reach the "donut hole" get a 50 percent discount on brand-name drugs.

Primary care doctors and general surgeons practicing in underserved areas, such as inner cities and rural communities, get a 10 percent Medicare bonus.

Medicare Advantage plans begin restructuring of payments and freeze 2011 payments at 2010 levels.

Other

The voluntary long-term care insurance program starts. The program provides a cash benefit to help those with disabilities stay in their homes or pay nursing home costs. Benefits start five years after paying the coverage fee.

Increased funding for community health centers to provide care for many low-income and uninsured people.

Costs for over-the-counter drugs not prescribed by a doctor excluded from being reimbursed through an HSA or FSA.

Employers may report the value of health care benefits on employee W2 tax statements (optional for 2011 tax year; mandatory thereafter).

Start of new annual fees on pharmaceutical manufacturing sector.

2012
Health System Changes

Hospitals, doctors, and payers encouraged to join forces in "accountable care organizations."

Hospitals with high rates of preventable readmissions facing reduced Medicare payments.


2013
Taxes/Deductions

Individuals making $200,000 a year or couples making $250,000 would have a higher Medicare payroll tax of 2.35 percent on earned income - up from the current 1.45 percent. A new 3.8 percent tax on unearned income, such as dividends and interest, also added.

Contributions to flexible spending accounts (FSAs) limited to $2,500 a year - indexed for inflation. And the threshold for deducting medical expenses on taxes goes from 7.5 percent to 10 percent of income.

Medical device manufacturers have a 2.9 percent sales tax on medical devices, with exemptions for some, like eyeglasses, contact lenses and hearing aids.

No more deduction for expenses allocable to Medicare Part D subsidy for employers who maintain prescription drug plans for their Medicare Part D-eligible retirees.


For more information on how Health Care Reform may impact your care or your business
contact Allen Beach at Winthrop & Gray Company 800-258-1598.

How to get more than mileage out of your vehicles

Questions answered:  How to get More than Mileage Out of Your Vehicles


Q.  I'm using my personal car in my business. How much can I deduct on my tax return for the car?

A. There are two basic ways to write off expenses for business-related travel:

The standard mileage method. This provides a basic deduction for mileage and provides built-in depreciation. For 2011, the rate is 51 cents per mile (up from 50 cents for 2010). The tax law restricts the use of the standard mileage method.

A taxpayer cannot use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for any vehicle used for hire or for more than four vehicles used simultaneously.

The actual expense method. This gives you a depreciation allowance for the cost of the vehicle, plus deductions for gasoline and oil, insurance, and repairs. You generally wind up with a larger overall deduction than if you used the standard mileage method. You can write off the cost of the car based on the percentage of business use. For example, if the car is used 80 percent for business, you can write off 80 percent of the allowable expenses for that year.

Take Notes. To use the actual expense method, you must keep a log and record the time, place, mileage and business purpose of each business trip, and the total mileage for the year. That lets you calculate the business use percentage.

How does the IRS calculate the standard mileage rate for business? It is based on an annual study of the fixed and variable costs of operating an automobile.

There may be other limitations involved in tax-deductible business driving. Winthrop & Gray suggests that you consult with your tax adviser for information about the best ways to buy and operate a business car for tax purposes.

Importand news in Health Care

By Janet Adamy
Wall Street Journal

A federal judge ruled that Congress violated the Constitution by requiring Americans to buy insurance as part of the health overhaul passed last year, and said the entire law "must be declared void."

With his ruling, U.S. District Judge Roger Vinson set up a clash over whether the Obama administration still has the authority to carry out the law designed to expand insurance to 32 million Americans.

David Rivkin, an attorney for the plaintiffs, said the ruling meant the 26 states challenging the law must halt implementation of pieces that apply to states and certain small businesses represented by plaintiffs.

But the Obama administration said it has no to plans to halt implementation of the law. Already, it has mailed rebate checks to seniors with high prescription drug costs, helped set up insurance pools for people with pre-existing medical conditions and required insurers to allow children to stay on their parents' insurance policies until they reach age 26.
"We will continue to operate as we have previously," a senior administration official said.
In a pre-emptive move, the Justice Department, which represents the administration, is considering whether to seek a stay while its appeal against the decision is pending, spokeswoman Tracy Schmaler said.

The legal morass is the biggest blow yet to the law since President Barack Obama signed it in March. Most of the plaintiffs-governors and attorneys general in 26 states-are Republicans seeking to knock down Mr. Obama's signature legislative achievement.

The ruling by Judge Vinson, a Republican appointee in Pensacola, Fla., is the second of four to find that at least part of the law violates the Constitution's Commerce Clause by requiring citizens to carry insurance or pay a fee. But in asserting that the whole law is unconstitutional, it went much further than an earlier ruling in a Virginia case.

Thus far, the court decisions are breaking down along party lines, with two Democratic appointees to the federal bench having upheld the law and two Republican appointees ruling against it. The matter is expected to be settled by the U.S. Supreme Court.

The possibility that a court could ultimately unravel the law underscores just how difficult it is to enact universal health insurance-a goal that had eluded presidents dating back to Theodore Roosevelt. Mr. Obama's law, signed after a long-fought partisan battle, has been hailed by supporters as a historic achievement. But it is also one that cost Democrats seats in this fall's midterm elections, as the public was still divided in its support of the legislation.

The court battle against the law-once seen as a long-shot strategy by the Republicans-has emerged as the greatest threat to the overhaul. While the Republican-led House has voted to repeal the law, that effort is expected to die in the Democratic-controlled Senate, and in any case would face President Obama's veto pen.

Now even some Democrats who voted for the overhaul are contemplating whether Congress should strip out the so-called individual mandate, a once unthinkable scenario since the provision is seen as the backbone of the law. Since the law requires insurance companies to accept all comers, even people who are already sick, it requires healthy people to buy coverage as well.

Otherwise, economists say, insurance premiums would likely rise sharply because people would wait until they were sick to seek coverage.

The victories are emboldening Republicans in Congress who see attacking the law as a key strategy for retaking the White House in 2012. "This ruling confirms what Americans have been saying for months: The health spending bill is a massive overreach," said Senate Minority Leader Mitch McConnell (R., Ky.)

In his 78-page ruling, Judge Vinson wrote that the entire law must be voided because the individual insurance mandate is "not severable" from the rest of the law. Some laws contain what's known as a severability clause that says the rest of the law stands should a judge strike down a piece of it. But Democrats left it out.

The judge said he didn't believe an injunction to stop the health overhaul was appropriate, because it is generally understood that the executive branch will obey a federal court. The government, however, doesn't believe the ruling requires it to stop implementing the overhaul.

In court filings and testimony before the judge, the Obama administration argued that requiring Americans to carry insurance was within its constitutional powers, particularly those of the Commerce Clause that allows it to regulate economic activity. It argued that the health-care market is unique since all Americans receive medical care at some point. Requiring them to buy insurance is just a way of regulating how they pay for it, the administration said.

Judge Vinson rejected that view. Under the Obama administration's logic, he wrote, "Congress could require that everyone above a certain income threshold buy a General Motors automobile-now partially government-owned-because those who do not buy GM cars (or those who buy foreign cars) are adversely impacting commerce and a taxpayer-subsidized business."

Judge Vinson ruled in favor of the Obama administration on a secondary part of the suit, saying that the law's expansion of the Medicaid federal-state insurance program for the poor doesn't violate the Constitution.

The states argued that the law's addition of 16 million Americans to the Medicaid rolls violates the Spending Clause of the Constitution by burdening them without giving them room to opt out of the program.

But Judge Vinson said states clearly have the option to withdraw from the program, even though states "have little recourse to remaining the very junior partner in this partnership."

Critics say the law's implementation has been undercut by waivers the administration granted to various parties to avoid aspects of the law. For example, the administration has temporarily exempted some companies that provide bare-bones "mini-med" insurance plans from meeting a requirement in the law that says insurers must spend a certain portion of premiums on medical care.

The Obama administration says such waivers are only a bridge until 2014, when the full law takes effect and employers have more options for providing affordable coverage.

In addition to the House vote for repeal, Republicans are drafting a series of bills targeting particularly unpopular pieces of the law, including its requirement that larger employers provide coverage or pay a fee. They're also laying plans to choke off funding to hire federal workers to implement the law.

Under the law, most Americans who do not carry insurance starting in 2014 will pay a penalty. It eventually tops out at $2,085 a year for families lacking insurance.

Health policy experts say one alternative to the provision would be to make insurance more expensive for those who wait to buy coverage, providing an incentive for the uninsured to get covered early. But lawmakers from both parties agree that it would be complicated, and risky, to pull out such a central piece of the law without driving up insurance premiums.

Intersting Statistics to Help Your Companies Marketing Objectives

Some interesting statistic’s for those of you looking at our under and over age 65 population.

This could help direct your companies future marketing objectives.



38.9 million was the number of people 65 and older in the United States on July 1, 2008.
88.5 million is the projected number of people 65 and older in 2050.
$29,744 was the median 2008 income for householders 65 and older. The corresponding median income for all households was $50,303.
$239,400 was the median net worth for families in 2007 whose head of household was between 65 and 74. The corresponding median net worth for all families was $120,300.
80% of those 65 and older owned their homes in 2008.
What’s it mean?
The Senior population is growing like wild as Baby Boomers hit 65 and will continue to grow!
Although Seniors’ incomes are less than other population groups, their net worth is considerably higher.
A large percentage of Seniors own their homes, making them a stable population group.
Seniors have money and stability.

Source: http://seniorjournal.com/; http://en.wikipedia.org/wiki/Homeownership_in_the_United_States

wellness benefits for plan years beginning after September 23, 2010

Question:

If an employer maintains a grandfathered health plan, can it maintain a $500 annual limit on preventive and/or wellness benefits for plan years beginning after September 23, 2010?

Answer:


No. Lifetime dollar limits are prohibited and annual dollar limits are first restricted (then, later prohibited)-but only on the value of "essential health benefits."  


The IRS, DOL, and HHS have jointly issued interim final regulations (effective August 27, 2010) to implement the rules regarding lifetime and annual dollar limits. These regulations clarify that an exclusion of all benefits for a condition is not considered to be a lifetime or annual dollar limit. However, if any benefits are provided for a condition, then the annual and lifetime prohibitions apply.

"Essential health benefits" include minimum benefits in general categories and the items and services within those categories (to be determined by HHS), such as-

·         Ambulatory patient services,

·         Emergency services ,

·         Hospitalization,

·         Maternity and newborn care,

·         Mental health and substance use disorder services, including behavioral health treatment,

·         Prescription ,

·         Rehabilitative and habilitative services and devices,

·         Laboratory services,

·        Preventive and wellness services and chronic disease management , and

·         Pediatric services, including oral and vision care. 

Until HHS issues regulations, there is no way to precisely determine which benefits will be considered "essential" within the categories listed above. Many plans have lifetime and annual limits on certain benefits such as infertility coverage and chiropractic services. For purposes of enforcement, until such regulations are issued, the agencies will take into account "good faith" efforts to comply with a reasonable interpretation of "essential health benefits," but a plan must apply this definition consistently.

What is considered a rescission?

On June 22, 2010, the Departments of the Treasury, Labor and Health and Human Services ("HHS") released interim final regulations for group health plans and health insurance coverage relating to status as a preexisting conditions, lifetime and annual limits, rescissions, and patient protections under the Patient Protection and Affordable Care Act ("Affordable Care Act").  These regulations are under Section 9815(a)(1) of the Internal Revenue Code ("Code"), Section 715(a)(1) of the Employee Retirement Income Security Act ("ERISA") and Section XXVII of the Public Health Service Act (26 CFR 54.9815-2704T,2711T, 2712T, and 2719AT, 29 CFR 2590.715-2704, 2711, 2112, and 2719A and 45 CFR 147.108, 126, 128 and 138,  The following will summarize the provisions of the regulations.

Prohibitions on Preexisting Condition Exclusions
Group health plans and insurance companies will be prohibited from excluding individuals from coverage on the basis of any pre-existing condition exclusion. This rule will apply with respect to enrollees under the age of 19 for plan years beginning on or after September 23, 2010. For enrollees age 19 and over, the prohibition will apply for plan years beginning on or after January 1, 2014. This prohibition on pre-existing condition exclusions will also apply to grandfathered health plans. In addition, a blanket prohibition is created on pre-existing condition exclusions for all individual insurance policies and employer plans.
 
What is not considered a Preexisting Condition? These regulations make it clear the prohibition applies not just an exclusion of coverage of specific benefits associated with a preexisting condition in the case of a participant, but a complete exclusion from such plan or coverage, if that exclusion is based on a preexisting condition. These regulations do not prohibit a plan or a policy from excluding benefits if the exclusion applies regardless of when the condition arose relative to the effective date of coverage. Such exclusion will not be considered excluding a preexisting condition.

Lifetime and Annual Limits
Group health plans, and insurance companies are also prohibited from providing coverage that contains a lifetime limitation on the dollar value of "essential health benefits" for any participant or beneficiary. Similarly, group health plans and insurance companies are prohibited from imposing annual limitations on the dollar value of "essential health benefits" to any participant or beneficiary. This provision is otherwise applicable for plan years beginning on or after September 23, 2010, and it will apply to grandfathered health plans. Prior to January 1, 2014, however, a group health plan is free to establish a "restricted annual limit" on the dollar value of an individual's benefits that are part of "essential health benefits" as determined by HHS. Additionally, group health plans and insurance companies will remain free to impose either lifetime or annual limits on benefits that will not constitute "essential health benefits."

Additionally, group health plans and insurance companies will remain free to impose either lifetime or annual limits on benefits that will not constitute "essential health benefits."

What are Essential Health Benefits? The regulations define "essential health benefits" by referencing Section 1302(b) of the Affordable Care Act, but do provide any detail. Regulations on Section 1302(b) of the Affordable Care Act have not been released. However, Section 1302(b) of the Affordable Care Act provides that these items must be included:

*Ambulatory patient services.
*Emergency services.
*Hospitalization.
*Maternity and newborn care.
*Mental health and substance use disorder services, including behavioral health treatment.
*Prescription drugs.
*Rehabilitative and habilitative services and devices.
*Laboratory services.
*Preventive and wellness services and chronic disease management.
*Pediatric services, including oral and vision care.
 What Plans are excluded? Certain account-based plans are exempt from the restriction on annual limits. Health Flexible Spending Accounts, Medical Savings Accounts and Health Savings Accounts are specifically exempt. Health Reimbursement Accounts ("HRA") are specifically exempt if they are integrated with other coverage as part of a group health plan. The regulations also exempt retiree-only HRAs. The regulations reserve judgment on standalone HRAs.

Are full exclusions of conditions still possible? The regulations clarify that the prohibitions from providing coverage that contain a lifetime limitation on the dollar value of "essential health benefits" does not prevent a plan or an insurance company from excluding all benefits for a condition, but if any benefits are provided for a condition, then all of the requirements will apply. An exclusion of all benefit for a condition is not considered to be an annual or lifetime dollar limit.

What are the limits on "restricted annual limits"? In order to mitigate the potential for premium increases for all plans and policies, while at the same time ensuring access to "essential health benefits", the regulations adopt a three-year phased approach for restricted annual limits. Under these regulations, annual limits on the dollar value of benefits that are "essential health benefits" may not be less than the following amounts for plan years (in the individual market, policy years) beginning before January 1, 2014:

*For plan or policy years beginning on or after September 23, 2010 but before September 23, 2011, $750,000; 

* For plan or policy years beginning on or after September 23, 2011 but before September 23, 2012, $1.25 million; and

* For plan or policy years beginning on or after September 23, 2012 but before January 1, 2014, $2 million.
As these are minimums for plan years (in the individual market, policy years) beginning before 2014, plans or insurance companies may use higher annual limits or impose no limits. Plans and policies with plan or policy years that begin between September 23 and December 31 have more than one plan or policy year under which the $2 million minimum annual limit is available; however, a plan or policy generally may not impose an annual limit for a plan year (in the individual market, policy year) beginning after December 31, 2013.

How do these limits apply? The minimum annual limits for plan or policy years beginning before 2014 apply on an individual-by-individual basis. Thus, any overall annual dollar limit on benefits applied to families may not operate to deny a covered individual the minimum annual benefits for the plan year (in the individual market, policy year). These interim final regulations clarify that, in applying annual limits for plan years (in the individual market, policy years) beginning before January 1, 2014, the plan or health insurance coverage may take into account only "essential health benefits".

How do these restricted annual limits apply to mini-med plans? The restricted annual limits provided in these regulations are designed to ensure, in the vast majority of cases, that individuals would have access to needed services with a minimal impact on premiums. So that individuals with certain coverage, including coverage under a limited benefit plan or so-called "mini-med" plans, would not be denied access to needed services or experience more than a minimal impact on premiums, these regulations provide for HHS to establish a program under which the requirements relating to restricted annual limits may be waived if compliance with these regulations would result in a significant decrease in access to benefits or a significant increase in premiums. Guidance from HHS regarding the scope and process for applying for a waiver is expected to be issued in the near future.

Is there a new notice requirement for those who now eligible because of the repeal of life time limits? These regulations also provide that individuals who reached a lifetime limit under a plan or health insurance coverage prior to the issuance of these regulations and are otherwise still eligible under the plan or health insurance coverage must be provided with a notice that the lifetime limit no longer applies. If such individuals are no longer enrolled in the plan or health insurance coverage, the employer's plan or insurance company must  provide an enrollment (in the individual market, reinstatement) opportunity for such individuals. In the individual market, this reinstatement opportunity does not apply to individuals who reached their lifetime limits on individual health insurance coverage if the contract is not renewed or otherwise is no longer in effect. It would apply, however, to a family member who reached the lifetime limit in a family policy in the individual market while other family members remain in the coverage. These notices and the enrollment opportunity must be provided beginning not later than the first day of the first plan year (in the individual market, policy year) beginning on or after September 23, 2010. Anyone eligible for an enrollment opportunity must be treated as a special enrollee. This means that they must be given the right to enroll in all of the benefit packages available to similarly situated individuals upon initial enrollment.

Prohibition on Rescission
Group health plans and insurance companies will generally be prohibited from rescinding coverage with respect to an enrollee once such enrollee is covered. The exceptions will be for fraud or intentional misrepresentation by the enrollee, nonpayment of premiums, termination of the plan, or loss of eligibility. This standard applies to all rescissions, whether in the group or individual insurance market, and whether for insured or self-insured coverage. These rules also apply regardless of any contestability period that may otherwise apply. This new rule is effective for plan years beginning on or after September 23, 2010, and will apply to grandfathered health plans.

How do these new standards apply? These regulations include several clarifications regarding the standards for rescission. First, these regulations clarify that these rescission rules apply whether the rescission applies to a single individual, an individual within a family, or an entire group of individuals. Thus, for example, if an insurance company attempted to rescind coverage of an entire employment-based group because of the actions of an individual within the group, the standards of these regulations would apply. Second, these regulations clarify that these rescission rules apply to representations made by the individual or a person seeking coverage on behalf of the individual. Thus, if a plan sponsor seeks coverage from an insurance company for an entire employment-based group and makes representations, for example, regarding the prior claims experience of the group, the standards of these regulations would also apply.

What is fraud? These regulations clarify that, to the extent that an omission constitutes fraud, that omission would permit the plan or issuer to rescind coverage under this section. An example in these interim final regulations illustrates the application of the rule to misstatements of fact that are inadvertent.

What is considered a rescission? For purposes of these regulations, a rescission is a cancellation or discontinuance of coverage that has retroactive effect. For example, a cancellation that treats a policy as void from the time of the individual's or group's enrollment is a rescission. As another example, a cancellation that voids benefits paid up to a year before the cancellation is also a rescission for this purpose. A cancellation or discontinuance of coverage with only a prospective effect is not a rescission, and neither is a cancellation or discontinuance of coverage that is effective retroactively to the extent it is attributable to a failure to timely pay required premiums or contributions towards the cost of coverage.

When coverage is rescinded, must advance notice be sent? In addition to setting a new Federal floor standard for rescissions, the new law also adds a new advance notice requirement when coverage is rescinded where still permissible. Specifically, the new law provides that coverage may not be cancelled unless prior notice is provided. These regulations provide that a group health plan, or insurance company offering group health insurance coverage, must provide at least 30 calendar days advance notice to an individual before coverage may be rescinded. The notice must be provided regardless of whether the rescission is of group or individual coverage; or whether, in the case of group coverage, the coverage is insured or self-insured, or the rescission applies to an entire group or only to an individual within the group. This 30-day period will provide individuals and plan sponsors with an opportunity to explore their rights to contest the rescission, or look for alternative coverage, as appropriate.

Patient Protections
 Group health plans and insurance companies will be subject to several "patient protection" requirements. A plan that requires the designation of a participating primary care provider will be required to allow participants to choose any such provider who is available (including the choice of a pediatric specialist as the primary care provider for a child). Additionally, group health plans that cover emergency services will be required to cover such services without the need for prior authorization and without regard to any term or condition of the coverage, or whether the provider participates in such plan. Group health plans also will not be able to require authorization or a referral before a female participant/beneficiary could seek obstetrical or gynecological care from a professional specializing in such care. These requirements will be effective for plan years beginning on or after January 1, 2014, but will not apply to grandfathered health plans. 

Choice of Health Care Professional: Under these regulations, the plan or insurance company must provide a notice informing each participant (or in the individual market, the primary subscriber) of the terms of the plan or health insurance coverage regarding designation of a primary care provider. Accordingly, these regulations require such plans and insurance companies to provide a notice to participants (in the individual market, primary subscribers) of these rights when applicable. Model language is provided in these regulations. The notice must be provided whenever the plan or insurance company provides a participant with a summary plan description or other similar description of benefits under the plan or health insurance coverage, or in the individual market, provides a primary subscriber with a policy, certificate, or contract of health insurance. The following model language can be used to satisfy this disclosure requirement:

(A) For plans and issuers that require or allow for the designation of primary care providers by participants or beneficiaries, insert:
 [Name of group health plan or health insurance issuer] generally [requires/allows] the designation of a primary care provider. You have the right to designate any primary care provider who participates in our network and who is available to accept you or your family members. [If the plan or health insurance coverage designates a primary care provider automatically, insert: Until you make this designation, [name of group health plan or health insurance issuer] designates one for you.] For information on how to select a primary care provider, and for a list of the participating primary care providers, contact the [plan administrator or issuer] at [insert contact information].

(B) For plans and issuers that require or allow for the designation of a primary care provider for a child, add:
 For children, you may designate a pediatrician as the primary care provider.

(C) For plans and issuers that provide coverage for obstetric or gynecological care and require the designation by a participant or beneficiary of a primary care provider, add:
You do not need prior authorization from [name of group health plan or issuer] or from any other person (including a primary care provider) in order to obtain access to obstetrical or gynecological care from a health care professional in our network who specializes in obstetrics or gynecology. The health care professional, however, may be required to comply with certain procedures, including obtaining prior authorization for certain services, following a pre-approved treatment plan, or procedures for making referrals. For a list of participating health care professionals who specialize in obstetrics or gynecology, contact the [plan administrator or issuer] at [insert contact information].
 
Emergency Services: These regulations require that a plan or health insurance coverage providing emergency services must do so without the individual or the health care provider having to obtain prior authorization (even if the emergency services are provided out of network) and without regard to whether the health care provider furnishing the emergency services is an in-network provider with respect to the services. The emergency services must be provided without regard to any other term or condition of the plan or health insurance coverage other than the exclusion or coordination of benefits, an affiliation or permitted waiting period applicable or cost-sharing requirements. For a plan or health insurance coverage with a network of providers that provides benefits for emergency services, the plan or insurance company may not impose any administrative requirement or limitation on benefits for out-of-network emergency services that is more restrictive than the requirements or limitations that apply to in-network emergency services.

Cost-sharing requirements expressed as a copayment amount or coinsurance rate imposed for out-of-network emergency services cannot exceed the cost-sharing requirements that would be imposed if the services were provided in-network. Out-of-network providers may, however, also balance bill patients for the difference between the providers' charges and the amount collected from the plan or issuer and from the patient in the form of a copayment or coinsurance amount. The Affordable Care Act excludes such balance billing amounts from the definition of cost sharing, and the requirement that cost sharing for out-of-network services be limited to that imposed in network only applies to cost sharing expressed as a copayment or coinsurance rate.

Because the Affordable Care Act does not require plans or issuers to cover balance billing amounts, and does not prohibit balance billing, even where the protections in the statute apply, patients may be subject to balance billing.

To avoid the circumvention of these new protections, it is necessary that a reasonable amount be paid before a patient becomes responsible for a balance billing amount. Thus, these regulations require that a reasonable amount be paid for services by some objective standard. In establishing the reasonable amount that must be paid, a wide variation had to bet taken into account in how plans and insurance companies determine both in-network and out-of network rates. Accordingly, these regulations consider three amounts: the in-network rate, the out-of-network rate, and the Medicare rate. Specifically, a plan or issuer satisfies the copayment and coinsurance limitations in the law if it provides benefits for out-of-network emergency services in an amount equal to the greatest of three possible amounts:

1)    The amount negotiated with in-network providers for the emergency service furnished;
2)    The amount for the emergency service calculated using the same method the plan generally uses to determine payments for out-of-network services (such as the usual, customary, and reasonable charges) but substituting the in-network cost-sharing provisions for the out-of-network cost-sharing provisions; or
3)    The amount that would be paid under Medicare for the emergency service.
Each of these three amounts is calculated excluding any in-network copayment or coinsurance imposed with respect to the participant, beneficiary, or enrollee.

In applying the rules relating to emergency services, the law and these regulations define the terms emergency medical condition, emergency services, and stabilize. These terms are defined generally in accordance with their meaning under the Emergency Medical Treatment and Labor Act ("EMTALA"), section 1867 of the Social Security Act. There are, however, some minor variances from the EMTALA definitions. For example, both EMTALA and PHS Act section 2719A define "emergency medical condition" in terms of the same consequences that could reasonably be expected to occur in the absence of immediate medical attention. Under EMTALA regulations, the likelihood of these consequences is determined by qualified hospital medical personnel, while under the new law the standard is whether a prudent layperson, who possesses an average knowledge of health and medicine, could reasonably expect the absence of immediate medical attention to result in such consequences. 

Question: What is coinsurance?

Question: What is coinsurance?

Answer:

Insurance underwritten jointly with another or others. Coinsurance is the portion of the medical bill that is shared by both the insured and the insurer. For example, if you had an 85% to $5000 coinsurance, you would be responsible for 15% of the medical expense while the insurer would be responsible for the other 85%.

Under the Privacy Rule, employer health plans that are not in compliance can face new civil and criminal penalties.

These penalties are based on a tiered approach, as follows: 

·   No Knowledge.  Where a person does not know, and by exercising due diligence would not have known, that the person violated HIPAA's administrative simplification provisions; the minimum penalty is $100 per violation, with a cap of $25,000 for violations of an identical requirement or prohibition.  The maximum penalty is $50,000 per violation, with a cap of $1.5 million for violations of an identical requirement or prohibition. 

 ·   Reasonable Cause. Where a violation is due to "reasonable cause" and not "willful neglect," the minimum penalty is $1,000 per violation, with a cap of $100,000 for violations of an identical requirement or prohibition.  The maximum penalty is $50,000 per violation, with a cap of $1.5 million for violations of an identical requirement or prohibition. 

 

·    Willful Neglect (but Corrected).  Where a violation is due to "willful neglect," but was corrected, the minimum penalty is $10,000 per violation, with a cap of $250,000 for violations of an identical requirement or prohibition.  The maximum penalty is $50,000 per violation, with a cap of $1.5 million for violations of an identical requirement or prohibition. 

·   Willful Neglect (but not Corrected). Where a violation is due to "willful neglect," but was not corrected, the minimum penalty is $50,000 per violation, with a cap of $1.5 million for violations of an identical requirement or prohibition.  Additionally, there can be individual penalties of as much as $25,000 per violation or up to $250,000 or 10 years in prison for information knowingly and wrongfully disclosed.

The Affordable Care Act's New Patient's Bill of Rights

A major goal of the Affordable Care Act - the health insurance reform legislation President Obama signed into law on March 23 - is to put American consumers back in charge of their health coverage and care. Insurance companies often leave patients without coverage when they need it the most, causing them to put off needed care, compromising their health and driving up the cost of care when they get it. Too often, insurance companies put insurance company bureaucrats between you and your doctor. The Affordable Care Act cracks down on the some of the most egregious practices of the insurance industry while providing the stability and the flexibility that families and businesses need to make the choices that work best for them.

Today, the Departments of Health and Human Services (HHS), Labor, and Treasury issued regulations to implement a new Patients Bill of Rights under the Affordable Care Act - which will help children (and eventually all Americans) with pre-existing conditions gain coverage and keep it, protect all Americans' choice of doctors and end lifetime limits on the care consumers may receive. These new protections apply to nearly all health insurance plans.1

How These New Rules Will Help You

* Stop insurance companies from limiting the care you need.

For most plans starting on or after September 23, these rules stop insurance companies from imposing pre-existing condition exclusions on your children; prohibit insurers from rescinding or taking away your coverage based on an unintentional mistake on an application; ban insurers from setting lifetime limits on your coverage; and restrict their use of annual limits on coverage.

* Remove insurance company barriers between you and your doctor. For plans starting on or after September 23, these rules ensure that you can choose the primary care doctor or pediatrician you want from your plan's provider network, and that you can see an OB-GYN without needing a referral. Insurance companies will not be able to require you to get prior approval before seeking emergency care at a hospital outside your plan's network. These protections apply to health plans that are not grandfathered.

Builds On Other Affordable Care Act Policies

These new protections complement other parts of the Affordable Care Act including:

* Reviewing Insurers' Premium Increases. HHS recently offered States $51 million in grant funding to strengthen review of insurance premiums. Annual premium hikes can put insurance out of reach of many working families and small employers. These grants are a down-payment that enable States to act now on reviewing, disclosing, and preventing unreasonable rate hikes. Already, a number of States, including California, New York, Maine, Pennsylvania and others are moving forward to improve their oversight and require more transparency of insurance companies' requests to raise rates.

* Getting the Most from Your Premium Dollars. Beginning in January, the Affordable Care Act requires individual and small group insurers to spend at least 80% and large group insurers to spend at least 85% of your premium dollars on direct medical care and efforts to improve the quality of care you receive - and rebate you the difference if they fall short. This will limit spending on overhead and salaries and bonuses paid to insurance company executives and provide new transparency into how your dollars are spent. Insurers will be required to publicly disclose their rates on a new national consumer website - HealthCare.gov.

* Keeping Young Adults Covered. Starting September 23, children under 26 will be allowed to stay on their parent's family policy, or be added to it. Group health plans that are grandfathered plans can limit this option to adult children that don't have another offer of employment-based coverage.  Many insurance companies and employers have agreed to implement this program early, to avoid a gap in coverage for new college graduates and other young adults.

* Providing Affordable Coverage to Americans without Insurance due to Pre-existing Conditions: Starting July 1, Americans locked out of the insurance market because of a pre-existing condition can begin enrolling in the Pre-existing Condition Insurance Plan (PCIP). This program offers insurance without medical underwriting to people who have been unable to get it because of a preexisting condition. It ends in 2014, when the ban on insurers refusing to cover adults with pre-existing conditions goes into effect and individuals will have affordable choices through Exchanges - the same choices as members of Congress.

New Consumer Protections Starting As Early As This Fall

The new Patients Bill of Rights regulations detail a set of protections that apply to health coverage starting on or after September 23, 2010, six months after the enactment of the Affordable Care Act. They are:

* No Pre-Existing Condition Exclusions for Children Under Age 19. Each year, thousands of children who were either born with or develop a costly medical condition are denied coverage by insurers. Research has shown that, compared to those with insurance, children who are uninsured are less likely to get critical preventive care including immunizations and well-baby checkups. That leaves them twice as likely to miss school and at much greater risk of hospitalization for avoidable conditions.

* A Texas insurance company denied coverage for a baby born with a heart defect that required surgery. Friends and neighbors rallied around the family to raise the thousands of dollars needed to pay for the surgery and put pressure on the insurer to pay for the needed treatment. A week later the insurer backed off and covered the baby.2

The new regulations will prohibit insurance plans from denying coverage to children based on a pre-existing conditions. This ban includes both benefit limitations (e.g., an insurer or employer health plan refusing to pay for chemotherapy for a child with cancer because the child had the cancer before getting insurance) and outright coverage denials (e.g., when the insurer refuses to offer a policy to the family for the child because of the child's pre-existing medical condition). These protections will apply to all types of insurance except for individual policies that are "grandfathered," and will be extended to Americans of all ages starting in 2014.

* No Arbitrary Rescission's of Insurance Coverage. Right now, insurance companies are able to retroactively cancel your policy when you become sick, if you or your employer made an unintentional mistake on your paperwork.

* In Los Angeles, a woman undergoing chemotherapy had her coverage cancelled by an insurer who insisted her cancer existed before she bought coverage. She faced more than $129,000 in medical bills and was forced to stop chemotherapy for several months after her insurance was rescinded.3

Under the regulations, insurers and plans will be prohibited from rescinding coverage - for individuals or groups of people - except in cases involving fraud or an intentional misrepresentation of material facts. Insurers and plans seeking to rescind coverage must provide at least 30 days advance notice to give people time to appeal. There are no exceptions to this policy.

* No Lifetime Limits on Coverage. Millions of Americans who suffer from costly medical conditions are in danger of having their health insurance coverage vanish when the costs of their treatment hit lifetime limits set by their insurers and plans. These limits can cause the loss of coverage at the very moment when patients need it most. Over 100 million Americans have health coverage that imposes such lifetime limits.

A teenager was diagnosed with an aggressive form of leukemia requiring chemotherapy and a stay in the intensive care unit. He reached his family's plan's $1 million lifetime limit in less than a year. His parents had to turn to the public for help when the hospital informed them it needed either $600,000 in certified insurance or a $500,000 deposit to perform the bone marrow transplant he needed.4

The regulation released today prohibits the use of lifetime limits in all health plans and insurance policies issued or renewed on or after September 23, 2010.

* Restricted Annual Dollar Limits on Coverage. Even more aggressive than lifetime limits are annual dollar limits on what an insurance company will pay for health care. Annual dollar limits are less common than lifetime limits, involving 8 percent of large employer plans, 14 percent of small employer plans, and 19 percent of individual market plans. But for people with medical costs that hit these limits, the consequences can be devastating.

*One study found that 10 percent of cancer patients reached a limit of what insurance would pay for treatment - and a quarter of families of cancer patients used up all or most of their savings on treatment.5

The rules will phase out the use of annual dollar limits over the next three years until 2014 when the Affordable Care Act bans them for most plans. Plans issued or renewed beginning September 23, 2010, will be allowed to set annual limits no lower than $750,000. This minimum limit will be raised to $1.25 million beginning September 23, 2011, and to $2 million beginning on September 23, 2012. These limits apply to all employer plans and all new individual market plans. For plans issued or renewed beginning January 1, 2014, all annual dollar limits on coverage of essential health benefits will be prohibited

Employers and insurers that want to delay complying with these rules will have to win permission from the Federal government by demonstrating that their current annual limits are necessary to prevent a significant loss of coverage or increase in premiums. Limited benefit insurance plans - which are often used by employers to provide benefits to part-time workers - are examples of insurers that might seek this kind of delay. These restricted annual dollar limits apply to all insurance plans except for individual market plans that are grandfathered.

* Protecting Your Choice of Doctors. Being able to choose and keep your doctor is a key principle of the Affordable Care Act, and one that is highly valued by Americans. People who have a regular primary care provider are more than twice as likely to receive recommended preventive care; are less likely to be hospitalized; are more satisfied with the health care system, and have lower costs. Yet, insurance companies don't always make it easy to see the provider you choose. One survey found that three-fourths of OB-GYNs reported that patients needed to return to their primary care physicians for permission to get follow-up care.

The new rules make clear that health plan members are free to designate any available participating primary care provider as their provider. The rules allow parents to choose any available participating pediatrician to be their children's primary care provider. And, they prohibit insurers and employer plans from requiring a referral for obstetrical or gynecological (OB-GYN) care. All of these provisions will improve people's access to needed preventive and routine care, which has been shown to improve the health of those treated and avoid unnecessary health care costs. These policies apply to all individual market and group health insurance plans except those that are grandfathered.

* Removing Insurance Company Barriers to Emergency Department Services. Some insurers will only pay for health care provided by a limited number or network of providers - including emergency health care. Others require prior approval before receiving emergency care at hospitals outside of their networks. This could mean financial hardship if you get sick or injured when you are away from home or not near a network hospital.

The new rules make emergency services more accessible to consumers. Health plans and insurers will not be able to charge higher cost-sharing (co payments or coinsurance) for emergency services that are obtained out of a plan's network. The rules also set requirements on how health plans should reimburse out-of-network providers. This policy applies to all individual market and group health plans except those that are grandfathered.

Benefits of Consumer Protections

The new rules will bring immediate relief to many Americans and provide peace of mind to millions more who are only one illness or accident away from medical and financial chaos.

The new ban on lifetime limits would affect group premiums by 0.5% or less and individual market premiums by 0.75% or less. The restricted annual limit policy would affect group and individual markets by roughly 0.1% or less (grandfathered individual market plans are exempt). And, the prohibition of preexisting conditions exclusions for children would affect group health plans by just a few hundredths of a percent. For new plans in the individual market, this impact would be roughly 0.5% in many states. In states with community rating, (roughly twenty states), the impact could be up to 1.0%. These costs are before taking into account benefits.

In addition, the rules will achieve greater cost savings by:

* Reducing the"hidden tax" on insured Americans: By making sure insurance covers people who are most at risk, there will be less uncompensated care and the amount of cost shifting among those who have coverage today will be reduced by up to $1 billion in 2013.

* Improving Americans' health: By making sure that high-risk individuals have insurance, the rules will reduce premature deaths.6 Insured children are less likely to experience avoidable hospital stays than uninsured children7 and, when hospitalized, insured children are at less risk of dying.8

* Protecting Americans' savings: High medical costs contribute to some degree to about half of the more than 500,000 personal bankruptcies in the U.S. in 2007.9 These costs borne by individuals might be assumed by insurance companies once rescission's are banned, annual limits are restricted, lifetime limits are prohibited, and most children have access to health insurance without pre-existing condition exclusions.

* Enhancing workers' productivity: Making sure that kids with health problems have coverage will reduce the number of days parents have to take off from work to care for family members. Parents will also be freed from "job lock," which occurs when people are afraid to take a better job because they might lose coverage for themselves or their families.10

____________________________________________________________________

1 Limits on pre-existing conditions and annual limits will not apply to existing "grandfathered" plans offering individual coverage. For details, see the Fact Sheet and interim final regulations released on the topic on June 14.

2 Jarvis, Jan, "Under Fire, Blue Cross Blue Shield of Texas Offers to Cover Medical Expenses for Crowley Baby," Houston Star-Telegram, (March 31, 2010).

3 Girion, Lisa "Health Net Ordered to Pay $9 million after Canceling Cancer Patient's Policy," Los Angeles Times (2008), available at: http://www.latimes.com/business/la-fi-insure23feb23,1,5039339.story

4 Murphy, Tom. "Patients struggle with lifetime health insurance benefit caps," Los Angeles Times, July 2008.

5 See "National Survey of Households Affected by Cancer." (2006) accessed at http://www.kff.org/kaiserpolls/upload/7591.pdf

6 See, for example, Almond, Doyle, Kowalski, Williams (2010), Doyle (2005), and Currie and Gruber (1996).

7 Keane, Christopher et al. "The Impact of Children's Health Insurance Program by Age." Pediatrics 104:5 (1999), available at: http://pediatrics.aappublications.org/cgi/reprint/104/5/1051 ..

8 Bernstein, Jill et al. "How Does Insurance Coverage Improve Health Outcomes?" Mathematica Policy Research (2010), available: http://www.mathematica-mpr.com/publications/PDFs/Health/Reformhealthcare_IB1.pdf

9 David Himmelstein et al, 2009.

10 Gruber, J. and B. Madrian. "Health Insurance, Labor Supply, and Job Mobility: A Critical Review of the Literature." (2001).