Industry News / Blog
|May 20 2013
Utah Bans Teen Drivers from Using Cell Phones
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Health Care Reform
The federal health care reform legislation, known as the Patient Protection and Affordable Care Act, signed by the President on March 23, 2010, and the Health Care and Education Reconciliation Act approved by Congress, signed by the President today, will expand the availability of health care coverage to millions of Americans. While some of the measures will be implemented this year, many do not take effect until 2014 and some extend out to 2020.
Below is a high-level overview of the timeline. It is important to note that many of these reforms and their effective dates are subject to the rules and regulations process both at the state and federal levels – which could alter the intended timing of implementation.
* Temporary retiree reinsurance program is established
* National risk pool is created, small business tax credit is established
* $250 rebate for Medicare members who reach the ”doughnut hole”
* Prohibits lifetime benefit limits – based on dollar amounts
* Allows restricted annual limits on the dollar value of certain benefits
* Coverage rescissions/cancellations are prohibited (except for fraud or intentional misrepresentation)
* Cost-sharing obligations for preventive services are prohibited
* Dependent coverage up to age 26 is mandated
* Internal and external appeal processes must be established
* Pre-existing condition exclusions for dependent children (under 19 years of age) are prohibited
* New health plan disclosure and transparency requirements are created
* Uniform coverage documents and standard definitions are developed
* Minimum medical loss ratios are mandated
* Medicare Advantage cost sharing limits effective
* Medicare beneficiaries who reach the doughnut hole will receive a 50% discount on brand name drugs
* A 10% Medicare bonus will be provided to primary care physicians and general surgeons practicing in underserved areas, such as inner cities and rural communities.
* Medicare Advantage plans would begin to have their payments frozen.
* Employers are required to report the value of health care benefits on employees' W2 tax statements.
* Annual industry fee for pharmaceutical manufacturers of brand name drugs.
* Voluntary long term care insurance program would be made available to provide cash benefit for assisting disabled individuals to stay in their homes or cover nursing home costs. Benefits would start five years after people begin paying a fee for coverage.
* Funding for community health centers would be increased to provide care for many low income and uninsured people.
2012* Hospitals, physicians, and payers
would be encouraged to band together in "accountable care
* Hospitals with high rates of preventable readmissions would face reduced Medicare payments.
2013* Individuals making $200,000 a
year or couples making $250,000 would have a higher Medicare payroll tax of
2.35% on earned income —up from the current 1.45%. A new tax of 3.8% on
unearned income, such as dividends and interest, is also added.
* Medical expense contributions to flexible spending accounts (FSAs) limited to $2,500 a year—indexed for inflation. In addition, the thresholds for claiming itemized tax deduction for medical expenses rise from 7.5% to 10% of income.
* Medical device manufacturers would have a 2.9% sales tax on medical devices; devices such as eyeglasses, contact lenses, and hearing aids would be exempt.
* Eliminates deduction for expenses allocable to Medicare Part D subsidy for employers who maintain prescription drug plans for their Medicare Part D eligible retirees.
Mandates & Subsidies:
* Individual and employer coverage responsibilities are effective.
* Individual affordability tax credits are created and small business tax credits are expanded.
Exchange & Insurance Reforms:
* State individual and small group health insurance exchanges operational.
* Guaranteed issue, guaranteed renewability, modified community rating and minimum benefit standards (“essential benefits” plan) effective.
* Lifetime and annual dollar limits are prohibited for essential benefits.
* Pre-existing condition exclusions are prohibited.
Taxes & Fees:
* Addition of new taxes on health insurers
* Medicaid expanded to cover low income individuals under age 65 up to 133% of the federal poverty level—about $28,300 for a family of four.
* Minimum medical loss ratio of 85% required for Medicare Advantage plans
Taxes & Fees:
* Tax (“Cadillac tax”) imposed on employer sponsored health insurance plans that offer policies with generous levels of coverage.
* Doughnut hole coverage gap in Medicare prescription benefit is fully phased out. Seniors continue to pay the standard 25% of their drug costs until they reach the threshold for Medicare catastrophic coverage.
Plug Could Be Pulled from Flood Insurance Program Again This Weekend
Insurance and real estate agents are being advised to prepare their clients for another possible interruption of the federal flood insurance program in three days, which could be longer than the one that happened last month.
The Senate is expected to vote today or tomorrow to extend it but there is concern this may not happen and, if it doesn't, the program could be down for weeks.
The National Flood Insurance Program (NFIP) is currently on schedule
to expire at midnight on March 28. The Senate has voted to extend it
until the end of the year, while the House has agreed to extend it just
one more month, until the end of April. If the Senate, which has been
preoccupied with healthcare legislation, does not act quickly to adopt
the House measure, the program will expire Sunday night.
The program ran into down-to-the-wire problems last month also. The NFIP extension was incorporated into a bill that extended unemployment benefits and COBRA subsidies. But a vote was delayed for several days by Sen. Jim Bunning, R- Kentucky, over job insurance funding issues unrelated to the flood program. Since there was no vote, the NFIP expired on Feb. 28 for a few days. The night of March 2, the Senate passed an extension of the program until March 28 and President Obama signed the measure right away.
Some fear politics could again get in the way of a Senate vote before the March 28 deadline.
"As we've seen, these short term extensions create situations where the NFIP is allowed to lapse because of unrelated political or legislative issues. Hopefully, the program will be extended again and lawmakers will use that time to pass legislation reforming the program and extending it for a longer term," said Matt Brady, spokesman for the National Association of Mutual Insurance Companies.
"We still believe the extension will pass, but given recent history I think it's always a good idea for agents and brokers to be prepared for a hiatus," he said.
John Prible is also concerned about the possibility of delaying tactics in the Senate since the NFIP provision is again tied to a bill on unemployment benefits and COBRA subsidies. Prible is vice president of federal government affairs for the Independent Insurance Agents and Brokers (the Big "I"). But Prible said Senate staffers he spoke with today are "optimistic" the Senate will act this afternoon or tomorrow.
What really concerns Prible is that if the Senate does not act, the program could be out of operation for two weeks because Congress goes on a recess for that long.
"That's scary," Prible said.
While not perfect, the longer Senate extension until Dec. 31, 2010 would have at least kept the program running through the hurricane season, NAMIC's Brady noted.
The possible hiatus comes at a time when the Federal Emergency Management Administration (FEMA), which administers NFIP, state regulators and the industry are trying to get more people to buy flood insurance. March 15-19 was designated National Flood Insurance Awareness Week and state insurance departments have been issuing advisories urging consumers to purchase coverage.
According to the National Weather Service, more than one-third of the country is in danger of flooding this time of year.
The NFIP sunset last month caused headaches for insurance agents and their customers as well as delays for some consumers waiting to close on the sale of a property within a flood hazard area.
While no new policies can be issued during a lapse in authorization, consumers with current policies remain covered by the federal program, according to the National Association of Insurance Commissioners. Claims payments are not affected.
Insurance agent and company lobbyists have for years been pressing for a multi-year renewal along with broader reforms to the NFIP to no avail thus far.Bob Rusbuldt, Big "I" CEO and president, the Independent Insurance Agents and Brokers of America, has criticized Congress for letting NFIP lapse and not tending to reforms for NFIP.