New York Times

The Obama administration said Friday that most health insurance plans must cover contraceptives for women free of charge, and it rejected a broad exemption sought by the Roman Catholic Church for insurance provided to employees of Catholic hospitals, colleges and charities.

Federal officials said they would give such church-affiliated organizations one additional year – until Aug. 1, 2013 – to comply with the requirement. Most other employers and insurers must comply by this Aug. 1.

Leaders of the Roman Catholic Church had personally appealed to President Obama to grant the broad exemption. He made the final decision on the issue after hearing from them, as well as from family planning advocates, scientific experts and members of Congress, administration officials said.

The rule takes a big step to remove cost as a barrier to birth control, a longtime goal of advocates for women’s rights and experts on women’s health.

In announcing details of the final rule on Friday, Kathleen Sebelius, the secretary of health and human services, said it “strikes the appropriate balance between respecting religious freedom and increasing access to important preventive services.”

“Scientists have abundant evidence that birth control has significant health benefits for women,” Ms. Sebelius said, and “it is documented to significantly reduce health costs.”

Catholic bishops issued a statement saying they would fight the “edict” from the government.

“In effect, the president is saying we have a year to figure out how to violate our consciences,” said Archbishop Timothy M. Dolan of New York, the president of the United States Conference of Catholic Bishops.

In an interview, Archbishop Dolan, who is to become a cardinal next month, said, “We’re unable to live with this.”

Other opponents of the rule said they would seek legislation to block it and might challenge it in court as well.

The rule includes an exemption for certain “religious employers,” including houses of worship. But church groups said the exemption was so narrow that it was almost meaningless. A religious employer cannot qualify for the exemption if it employs or serves large numbers of people of a different faith, as many Catholic hospitals, universities and social service agencies do.

Ms. Sebelius said the one-year grace period would be available to certain “nonprofit employers who, based on religious beliefs, do not currently provide contraceptive coverage in their insurance plan.” The extra time will allow them to “adapt to the new rule,” Ms. Sebelius said.

Chris Jacobs, a health policy analyst for Senate Republicans, said, “This decision looks suspiciously like yet another political stunt designed to delay the controversy by a year, until after the president’s re-election campaign.”

Senator Orrin G. Hatch, Republican of Utah, said the transition period was pointless.

“The problem is not that religious institutions do not have enough time to comply,” Mr. Hatch said. “It’s that they are forced to comply at all. Unfortunately, the administration has shown a complete lack of regard for our constitutional commitment to religious liberty.”

The National Association of Evangelicals said that as a result of the White House decision, “Employers with religious objections to contraception will be forced to pay for services and procedures they believe are morally wrong.”

The Becket Fund for Religious Liberty, a nonprofit law firm, has filed lawsuits challenging an earlier version of the rule in federal courts on behalf of a Catholic college connected to a monastery in North Carolina and an evangelical university in Colorado.

The 2010 health care law says insurers must cover “preventive health services” and cannot charge for them if the plan is nongrandfathered.

The new rule interprets this mandate. It requires coverage of the full range of contraceptive methods approved by the Food and Drug Administration. Among the drugs and devices that must be covered are emergency contraceptives including pills known as ella and Plan B. The rule also requires coverage of sterilization procedures for women without co-payments or deductibles.

The issue forced Mr. Obama to weigh competing claims of Catholic leaders and advocates for women’s rights.

The administration said in August that it intended to require coverage of contraceptives for women, as recommended by an expert panel of the National Academy of Sciences. But the White House reconsidered the issue after hearing protests from the Catholic Church and many Republicans in Congress.

The protests prompted debate within the administration. Ms. Sebelius and the president’s health policy team strongly supported the new rule. But Democratic members of Congress who lobbied the White House said they believed that Mr. Obama’s chief of staff, William M. Daley, and his special assistant for religious affairs, Joshua DuBois, favored a broader exemption.

Senator Richard Blumenthal, Democrat of Connecticut, described the final rule as a huge victory for women’s health. It will, he said, “ensure that women have access to full health care services, regardless of their employer, so they can make the best health choices for themselves and their families.”

Representative Lois Capps, Democrat of California, said, “The administration deserves credit for standing its ground and following the science.”

Cecile Richards, president of the Planned Parenthood Federation of America, said the decision “means that millions of women, who would otherwise pay $15 to $50 a month, will have access to affordable birth control, helping them save hundreds of dollars each year.”

Archbishop Dolan said he discussed the issue with Mr. Obama last November and came away reassured that the president understood the Catholic Church’s position. Now, the archbishop said in the interview, “The sentiments of hope that stemmed from reassurances that I thought I received in November were apparently misplaced.”

The archbishop said he had heard from evangelical, Greek Orthodox and Orthodox Jewish leaders who were also concerned about the rule.

Under the government’s narrow criteria, the bishops said, “even the ministry of Jesus and the early Christian Church would not qualify as ‘religious,’ because they did not confine their ministry to their co-religionists,” but urged compassion for the sick and the poor, regardless of faith or creed.

Health care reform imposes a new $2,500 limit on annual
salary reduction contributions to health FSAs offered under cafeteria plans.
When is this change effective?

Under
Code Section 125(i), as amended by PPACA, Pub. L. No. 111-148 (2010) and HCERA,
Pub. L. No. 111-152 (2010), this change is effective for taxable years
beginning after December 31, 2012. Also, Code Section 125(i) provides that in
order for the health FSA to be a qualified benefit under the cafeteria plan;
consequently, it must be set forth in the applicable plan documents.

Code
Section 125(i)(2) provides that the $2,500 amount will be indexed for inflation
for taxable years beginning after December 31, 2013. All health FSAs offered
under cafeteria plans must comply with this new requirement

For
purposes of the limit, the IRS indicated in Notice 2010-38 that the term
“taxable year” refers to the taxable year of the employee
participating in the health FSA. In most cases, this will be the calendar year.
Thus, it appears that the $2,500 limit is effectively a calendar-year limitation
that applies beginning January 1, 2013. For plans that currently permit health
FSA salary reductions in excess of $2,500, plan amendments and changes to
employee communications will be required before the January 1, 2013 effective
date.

This
new $2,500 limit raises special issues for non-calendar-year health FSAs. The
plan administrator must monitor compliance with the limit on a calendar-year
basis. These non-calendar year plans must be advised to take the limit into
account when conducting enrollment for the plan year that includes the January
1, 2013 effective date.  

No, unless the employer amends the HRA to only reimburse dental and vision expenses and/or premiums. See the discussion below:

The health care reform law prohibits group health plans from establishing “lifetime limits on the dollar value of benefits for any participant or beneficiary” for plan years beginning on or after September 23, 2010, as provided under PHSA §2711(a)(1)(A), For plan years beginning on or after September 23, 2010 and prior to January 1, 2014, the health care reform law allows “restricted annual limits” on essential health benefits, but for plan years beginning on or after January 1, 2014, no annual limits on essential health benefits are permitted.

HRAs are group health plans that provide reimbursements up to a maximum dollar amount for a coverage period and generally, though not always, allow unused amounts to be carried forward to increase the maximum reimbursement in subsequent coverage periods as provided in IRS Notice 2002-45, 2002-28 I.R.B. 93. In essence, then, HRAs are account-based benefits which by their very nature impose upper limits on the dollar value of benefits.

There are three exemptions for HRAs from these annual limit requirements. These include:  

·         Retiree-only HRAs, as provided in 75 Fed. Reg. 34537, 

·         Those HRAs that provide excepted benefits under the HIPAA portability rules, as provided in Treas. Reg. §54.9831-1(c); DOL Reg. §2590.732(c); and 45 CFR §146.145(c). HRAs that provide only limited-scope dental or vision benefits will not be subject to the annual limit rules.

·         HRAs that are integrated with other coverage as part of a (more comprehensive) group health plan will not violate the annual limit rules so long as the other coverage on its own would comply, as provided in Preamble to Interim Final Rules Relating to Preexisting Condition Exclusions, Lifetime and Annual Limits, Rescissions, and Patient Protections Under PPACA, 75 Fed. Reg. 37188, 37190.

For any HRA that does not come under one of the above exemptions, there are offer two ways to obtain a temporary exemption from the annual limit restrictions: by applying for a waiver or by satisfying the requirements of a class exemption. The window of opportunity for filing waiver applications closed on September 22, 2011; and both the waiver and class exemption apply only to HRAs that were in effect prior to September 23, 2010. This is provided in the CCIIO Supplemental Guidance (CCIIO 2011-1D): Concluding the Annual Limit Waiver Application Process and CCIIO Supplemental Guidance (CCIIO 2011-1E): Exemption for Health Reimbursement Arrangements that are Subject to PHS Act Section 2711.

A copy of each can be obtained by clicking on the links below:

CCIIO Supplemental Guidance (CCIIO 2011-1D): Concluding the Annual Limit Waiver Application Process: 

http://cciio.cms.gov/resources/files/06162011_annual_limit_guidance_2011-2012_final.pdf

CCIIO Supplemental Guidance (CCIIO 2011-1E): Exemption for Health Reimbursement Arrangements that are Subject to PHS Act 2711:

http://cciio.cms.gov/resources/files/final_hra_guidance_20110819.pdf

For the purpose of the waiver and the class exemption, the term “in effect” is not defined, but it presumably means the HRA had been formally adopted (and perhaps even providing benefits or accumulating account balances) prior to September 23, 2010. The exemption clearly does not apply to an HRA that was created significantly after that date-for example, a company that designs an HRA in 2011 to be effective January 1, 2012.

In order for any “free standing” HRAs adopted prior to September 23, 2010 to rely on the exemption, they must comply with the record retention and annual notice requirements that apply under the waiver program (which are discussed above). This is true even though that waiver program may not be available to the HRA (e.g., because the HRA did not submit an application prior to September 22, 2011).

A participant ’s elections under a cafeteria plan must be  irrevocable and cannot be changed during the period of coverage.  This is generally the 12-month requirement. Employers are not required to allow any exceptions to this rule.  It is very common for most employers allow participants to change their elections during the plan year if the participant experiences an event that falls under one of several exceptions allowed by the IRS under the regulations. It is up to the employer to specify less than all of the exceptions or make the exceptions more restrictive than the tax laws require.

The IRS regulations generally provide 12 different permitted election change events that can warrant a mid-year election changes.  These events must be provided in the plan document and the employee summaries.

Please remember that some events provided below do not apply to all of the benefits offered under a cafeteria plan. The right to change elections in the case of a significant cost increase or coverage changes does not apply to health FSAs.

In addition, under proposed cafeteria regulations, a participant must be allowed to change his or her HSA contribution election at least once a month for any reason.

The following events permit a participant to change his or her election under the federal tax laws if the plan so provides (and if permitted for that particular benefit by the tax laws):

1. Change in Status

If certain “changes in status” occur for the participant, or for his or her spouse or dependents, then the participant may change the appropriate election, if the plan so provides. The following events are considered changes in status by the IRS under the regulations:

* a change in the participant’s marital status;

* a change in number of dependents;

* a change in employment status;

* a dependent’s satisfying or ceasing to satisfy dependent eligibility requirements;

* a change in residence; and

* commencement or termination of adoption proceedings.

The election change generally must be on account of and correspond with a change in status that affects eligibility for coverage under an employer’s plan (including a change in status that results in an increase or decrease in the number of a participant’s family members or dependents who may benefit from coverage under the plan).  

 2. Cost Changes, With Automatic Election Increases/Decreases

If benefit premiums for  a employer’s plan go up by an insignificant amount (e.g., 1%) in the middle of the plan year, then an employer can automatically adjust payroll so that the excess will be paid with pre-tax dollars, assuming that the cafeteria plan so provides in documentation. This is permitted because automatic increases and decreases to participants’ elected contributions for a qualified benefits plan may be made to reflect changes in the cost of the plan.

3. Significant Cost Changes

If an employer’s benefit premiums increase by a significant amount (e.g., 30%) in the middle of a plan year, participants may make corresponding election changes, if the plan so provides. These include:

* commencing participation in the plan for the option that decreased in cost; or

* in the case of a cost increase, revoking an election for that coverage and either receiving coverage under another benefit package option providing similar coverage or dropping coverage if no other benefit package option providing similar coverage is available.

As a result, participants may elect to increase their salary reductions for coverage. Alternatively, if a employer offers more than one coverage option, participants may revoke their elections for the option that has increased in cost and switch to another option. And if no other option providing similar coverage is available, then employees can drop their coverage entirely.

4. Significant Curtailment of Coverage

If a participant (or his or her spouse or dependent) has a significant curtailment of coverage during a coverage period that is not a “loss of coverage,” a participant may revoke his or her election for that coverage and elect instead to receive coverage under another benefit package option providing similar coverage. If the curtailment constitutes a loss of coverage, the participant may revoke the election for that coverage and either receive coverage under another benefit package option providing similar coverage or drop coverage if no similar benefit package option is available. In both cases, a participant’s election may be changed only if the plan so provides.  

5. Addition or Improvement of Benefit Package Option 

If a plan adds or significantly improves a coverage option, and if the plan so provides, participants may revoke their elections and elect coverage under the new or improved benefit package option. If a new health coverage option is added, participants can elect to drop coverage under the old option and switch to the new one. This change of election is allowed even for employees who had not previously participated in the cafeteria plan or elected the coverage option, assuming that the plan so provides.

6. Change in Coverage of Spouse or Dependent Under Another Employer Plan 

A participant may make an election change that is on account of and corresponds with a change in coverage under another employer plan (including a plan of the same employer or a plan of a spouse’s or dependent’s employer) if one of two conditions are met (and if the employee’s cafeteria plan provides for such an election change):

*Either the other cafeteria plan or qualified benefits plan must permit participants to make an election change that would be permitted under the IRS election change rules, or

*the period of coverage under the employee’s cafeteria plan must be different from the period of coverage under the other employer plan.

 7. Loss of Certain Other Health Coverage

A participant may make a prospective election to add coverage under a cafeteria plan for him or herself, his or her spouse, or other dependents if any of them lose group health coverage sponsored by a governmental or educational institution. Such coverage includes a state’s children’s health insurance program (SCHIP); a medical care program of an Indian tribal government, the Indian Health Service, or a tribal organization; a state health benefits risk pool; or a foreign government group health plan. The plan document must also permit the change.

8. HIPAA Special Enrollment Rights

HIPAA requires group health plans to provide special enrollment opportunities for certain persons after the initial enrollment period. A special enrollment right can arise as a result of a loss of eligibility for coverage under a group health plan or through health insurance. A special enrollment right can also arise if a new spouse or dependent is acquired by marriage, birth, adoption, or placement for adoption. The cafeteria plan may allow a participant to make an election change under the cafeteria plan to correspond with these HIPAA special enrollment rights.

9. COBRA Qualifying Event

The cafeteria plan may permit a participant to increase pre-tax contributions for coverage if a qualifying event under COBRA occurs with respect to him or her or his or her spouse or other dependent-such as loss of eligibility for regular coverage due to loss of dependent status under the health plan or a reduction of hours.

10. Judgments, Decrees, or Orders

If a judgment, decree, or order (including a qualified medical child support order) resulting from a divorce, legal separation, annulment, or change in legal custody requires accident or health coverage for a participant’s child, then he or she may change his or her election to:

* add coverage if the order requires coverage for the child under the participant’s plan; or

* drop coverage if the order requires another individual to provide coverage for the child and the coverage is actually provided.

11. Entitlement to Medicare or Medicaid

If a participant (or the participant’s spouse or dependent) becomes entitled to Medicare or Medicaid coverage (i.e., becomes enrolled), then the participant may make a prospective election change to cancel or reduce health coverage under the employer’s plan and to make a corresponding change in salary reductions. Loss of Medicare or Medicaid entitlement also allows a participant to make a new election or increase health coverage under the employer’s plan. In each case, the plan must provide for the election change.

12. FMLA Leav

A participant may revoke an existing election of group health plan coverage and make such other election for the remaining portion of the period of coverage as provided under the FMLA and IRS rules. For a participant continuing group health plan coverage during an unpaid leave, three payment options can apply, depending on how the plan is drafted. Participant can:

* prepay their contributions on a pre-tax basis (provided that the leave does not straddle two plan years);

* make payments on a pay-as-you-go basis; or

* catch up on the contributions after returning from leave. 

The Health Care Reform laws expanded the group of individuals who can receive accident or health benefits on a tax-free basis to include children “of the taxpayer” who have not attained age 27 as of the end of the taxable year, as provided in Code Section 105(b). This change means that, in addition to the employee and his or her spouse, the following individuals may now receive employer-provided health coverage on a tax-free basis:

·         any child of the employee, until the end of the year the child turns age 26;  

·         an employee’s qualifying child; and                                       

·         an employee’s qualifying relative.  

For purposes of this exclusion, a “child” means “a son, daughter, stepson, or stepdaughter of the taxpayer, or an eligible foster child of the taxpayer, “as provided under Code §152(f)(1) The terms “qualifying child” and “qualifying relative” are defined using the modified Code §105(b) definition.

 Please remember that the tax-treatment provisions apply to all employer-provided accident or health coverage, including plans that provide only HIPAA-excepted benefits, such as limited-scope dental or vision benefits and most health FSAs.

 Special Note: Under these new rules, coverage for a child of a civil union spouse or domestic partner will only be tax free if he or she meets the requirements for being a qualifying relative. In many situations, the child of a civil union spouse or domestic partner may not be the “child” or the “qualifying child” of the employee.

Further Note:  For distributions from  a Health Savings Account (HSA) to be tax free for account holder, the medical expense must be incurred by an individual who meets the requirements for being either a “qualifying child” or a “qualifying relative,” as defined using the modified Code §105(b) definition. Code §223 was not amended by the Health Care Reform laws to add a provision allowing expenses for children under age 27 who are not Code §105(b) dependents, so unlike health FSAs, HRAs, and HDHPs, HSAs cannot pay the expenses of such children tax-free.

What do we really pay for health care?  As a consumer/patient, as an employer
(whether fully insured or self-funded)?  Or what are my reimbursements if I am the
provider (Hospitals, MD’s or clinics)? 
Or is this an area as I have had one close associate and friend put it,
“blind by design”?  What I am proposing
is that if you are in the health benefits industry and you don’t have solutions
to expose the contents hidden inside this industry’s “black boxes”, then you
are leaving your clients short changed and paying more than need be.

What do I mean by black boxes?  I mean the utter and pervasive lack of price
and cost transparency systemic in the health care reimbursement industry.  Let’s look at four distinct and common practices
that currently exist.

The Black Box of PPO Pricing:  Most consumers and brokers think when they
are tying into a particular insurance company’s PPO; they are in effect
homogenizing prices.  The PPO beats up
the provider to get the best common price for that service.  In effect, if I as the consumer, stay within
network then I am going to get the deeply discounted PPO negotiated price that
is consistent with other PPO providers. 
To put in layman’s terms if I go to Doc Smith and he orders an MRI, the
price of that MRI isn’t going to vary much within the network, no matter where
my network MD schedules it.

WRONG!!!  The same
MRI, ordered by the same PPO physician, within the same insurance company’s PPO
can vary by over 500%.  For years I
struggled to get pricing information (to no avail, insurance companies and
PPO’s always hid behind the veil that this was proprietary information).  Finally we found a service that allows
patients to shop in network before the procedure is performed.  It is packaged in a concierge format so the
employee only has to make a phone call.  This
cost effective service hasn’t failed to deliver – it’s provided a 10:1 ROI
since its inception.  This tool is
especially helpful for CDHP plans.  How
can you be a consumer if you don’t have an effective price shopping mechanism? Are
you providing this service to your employee groups?  A word of caution; don’t assume that
insurance branded self-help portals provide the same level of transparency or service.  We have found that less than 5% shop via web
portals and they don’t get down to the cpt code which is the real
differentiator our medical concierge service brings to the table.  Do you really believe the average employee is
going to surf the web for prices and then call their MD to switch locations?

The Black Box of PBM Pricing:    Pharmacy Benefits management (PMB) originated
in the mid 1980’s as a means to streamline the pharmacy benefit component of
health plans. The purpose was to make it convenient for the member by
eliminating the need to file a pharmacy paper claim.  The benefit to the employer group was more
aggressive pricing, increased plan design flexibility and improved utilization
reporting.

The drawback is you have to be a rocket scientist to
understand pricing and to know if you are getting the best from your PBM.  The standard AWP model seems to be confusing
at best, as does Maximum Allowable Cost (MAC) pricing for generics.  When you then factor in rebates and how they
are calculated, well this sends most people over the edge.  The good news on this front is AWP is set to
be replaced as the industry standard. 

The introduction of the “Transparent Model” a few years ago
was intended to take away the confusion by passing through all revenue streams
to the client with the exception of a fixed administration fee.  What it didn’t do is clarify the existing AWP
pricing mechanism or provide a universal definition of transparency.  So as for the Transparent Model; it seems it
isn’t all that transparent.

Sage Benefit Group works with two PBM’s that focus on a guaranteed
savings model.  Through detailed analysis
and evaluation of key components of the clients existing pharmacy benefits
program, including plan design, census, and aggregate claims history, future
projections are provided.  Savings results from competitive pricing and greater
oversight of the program in the area of utilization management.  One can expect savings in the range of 5%-15%
compared to the incumbent PBM dependent on the demographics of the group.  In addition, the group and member have a
single point of contact which enhances the customer service experience. 

This new approach to pharmacy benefits management takes the
emphasis away from pharmacy discounts, rebates and other components of PBM
which most people don’t understand and find confusing and focuses instead on
guaranteed savings to the client.  With
pharmacy cost now representing 10-20% of total claims annually; this is a very
effective and timely model, given the current economy.

The Black Box of Claw Backs:  A qualified health and welfare benefit plan
(a self-funded employer group or union trust) hires a TPA or ASO to administrate their claims and provide a PPO
structure for their employees.  Monthly
the TPA/ASO sends a claims bill to
the employer group to pay claims in accord to their PPO pricing codes.  The TPA/ASO
takes the payment from the employer and then sends out checks with the TPA/ASO’s
name on them to pay the various hospitals, MD’s etc.  All is fine to here.  Months (and even years) later, the TPA/ASO re-contacts the provider and says we overpaid
you.  Please send us a check for this
amount or we will subtract this from future payments to you.  The provider relents and the adjustments are
made. 

Question, who really has overpaid?  Isn’t it the qualified employer health
plan?  The money doesn’t make it back to
the plan, but stays “stuck” with the TPA/ASO. 
We have access to a unique firm (only non-law firm in nation doing it)
that finds these “stuck” claw backs and returns them to the health plan.  This isn’t a small amount of money.  It averages 10% of total claims on
self-funded plans.  The firm charges no
upfront costs and just takes a percentage of the money it actually recoups.
Folks this is a bomb shell and has already opened several doors of companies
with over a 1000 employees on their plan.

The Black Box of EOB’S:  This last area of transparency can be summed
up by asking, “When is an EOB not the clear arbiter of what an
employer/employee is actually paying”? 
Answer, very often.  What am I
getting at?  My common understanding of
EOB’s until a few years ago was that the TPA/ASO or insurance carrier sends out
an EOB which lists “retail” and “wholesale” prices.  Here’s what you would have paid if you didn’t
have our wonderful PPO discounts and here is what it costs with the
discounts.  The employee pays their
portion (deductibles, co-insurance, and co-pays) and the employer/plan pays the
rest thru the TPA/ASO to the medical provider. 
Isn’t this your understanding?  As
a self-funded employer I would get a compilation of all these EOB’s as a claims
report.  The truth is the amount listed
isn’t what is paid by the TPA/ASO to the providers.  It is further discounted according to proprietary
contracts the employer group is not privy to. 
You might find this shocking, but I have vetted it with a top actuary, a
hospital system administrator and a past president of a self-funded
professional trade association.  It is
the common practice.

The key thing now isn’t that it is happening, but is there a
solution to this “black box”.  Yes we
have a unique, proprietary PPO system that is totally transparent.  The real claims data belongs to the employer
group and is accessed in real time 24/7. 
Does it save money?  An employer
group will realize a 15% or more reduction in total claims paid.  We can bring this system down to group sizes
of 50 or more.  We specialize in reducing
big claims with this system.

Are you using the tools of the past or are you bringing
something new and substantive to your employee groups?  We work with brokers, consultants and agencies
throughout the U.S.  Contact us today for
an introductory webinar.

When any qualified beneficiary (including the covered employee) first becomes entitled to Medicare after electing COBRA coverage, his or her COBRA coverage can be terminated early (i.e., before the end of the maximum coverage period). This rule does not, however, affect the COBRA rights of other qualified beneficiaries in a family unit who are not entitled to Medicare (for example, the spouse and dependent children of a Medicare-entitled former employee). 

For COBRA purposes, what does “entitlement to Medicare” mean?

Under COBRA, the term “entitlement” means that an individual who is eligible for Medicare has actually become enrolled in Medicare, as provided under Treas. Reg. § 54.4980B-7, Q/A-3(b)

In other words, an individual is entitled to Medicare only if he or she may currently receive benefits. If the individual must take additional steps to enroll in Medicare before receiving benefits, then that individual is not “entitled” to Medicare for purposes of the COBRA rules until the steps have been taken and the enrollment has become effective.

A qualified beneficiary becomes entitled to Medicare benefits upon the effective date of enrollment in either part A or B, whichever occurs earlier. 

 Plan Sponsor

By Rebecca Moore 

editors@plansponsor.com

The U.S. Department of Health and Human Services (HHS) has proposed a framework to assist states in building insurance exchanges, which will be available in 2014 under the Patient Protection and Affordable Care Act.

 HHS proposed new rules offering states guidance and options on how to structure their Exchanges in two key areas: 

• Setting standards for establishing Exchanges, setting up a Small Business Health Options Program (SHOP), performing the basic functions of an Exchange, and certifying health plans for participation in the Exchange, and 
• Ensuring premium stability for plans and enrollees in the Exchange, especially in the early years as new people come in to Exchanges to shop for health insurance. 

 According to and HHS news release, the proposed rules set minimum standards for Exchanges, give states the flexibility they need to design Exchanges that best fit their unique insurance markets, and are consistent with steps states have already taken to move forward with Exchanges. They allow states to decide whether their Exchanges should be local, regional, or operated by a non-profit organization, how to select plans to participate, and whether to partner with HHS to split up the work.  

Forty-nine states, the District of Columbia and four territories accepted grants to help plan and operate Exchanges, the announcement said. In addition, over half of all states are taking additional action beyond receiving a planning grant such as passing legislation or taking Administrative action to begin building exchanges. States will continue to implement exchanges on different schedules through 2014.  

HHS is accepting public comment on the proposed rules over the next 75 days.  

The proposed rules are scheduled for publication in the July 15 Federal Register.   

More information about the insurance exchanges is at http://www.healthcare.gov/law/provisions/exchanges/index.html.  .