Key Provisions

The law's major provisions

Key provisions taking effect in 2010:

January

Small Business Tax Credits

March

Grandfathering
Donut Hole Rebates
Change in Medicare Enrollment Period

June

Early Retiree Reinsurance

July

High Risk Pool/PA Fair Care

September

Quality of Care Reporting

October

100 percent coverage for preventive care
Extension of Coverage for Dependents to age 26
Non-discriminatory Plans
Rescissions Ban
Internal Appeals and External Reviews
Elimination of lifetime maximums and restrictions on annual limits
Prohibition of pre-existing condition exclusions for children under 19
Coverage for Emergency Services
Choosing Doctors

Small business tax credits (effective tax year 2010)

What are the small business tax credits?

The small business health care tax credit provides a sliding-scale credit your business can claim starting with the 2010 tax return for qualified small employers who provide health insurance to their employees. Eligible small employers may qualify for a credit worth up to 35 percent of premiums they paid in 2010.

What does it mean to me?
If your small business meets the requirements, you can file for the tax credit beginning with your 2010 tax return. Check out this small business tax calculator to learn how much you can save.

Grandfathering (effective March 23, 2010)

What is grandfathering?
Individual and group health plans issued on or before March 23, 2010, can be “grandfathered,” which means they can keep their current plans intact and do not have to comply with some of the provisions of the new law, such as 100 percent coverage of preventive care. Plans must meet the following criteria to be grandfathered:

• benefits to diagnose or treat a particular condition are not terminated;
• no increases in coinsurance;
• increases in deductibles or copayments must meet the cost-adjustment test established by the reform law;
• no decreases in the amount of the employer subsidy toward the total cost of the premium that exceed 5 percent.
• an insured plan can retain its grandfather status if it changes its carrier, as long as the benefits provided by the new carrier continue to satisfy grandfathering requirements, and the change of carriers did not occur between September 23 and November 16, 2010.

What does it mean to me?
Health insurers do not decide the grandfathering status for employers. Because we cannot provide you with professional advice, employers may want to consult with their attorney or tax adviser to determine whether their plan is allowed to maintain grandfathering status.

Where can I learn more?
Grandfathering frequently asked questions

Donut hole rebates (effective March 23, 2010)

What is the donut hole rebate?
Effective this year, beneficiaries with Medicare Part D who reach the “donut hole” will receive a one-time, non taxable $250 rebate. The donut hole is the gap reached when Part D prescription drug costs go over $2,830. At that point, you are responsible for the entire cost of your prescription drugs (versus making copayments) — at least until your out-of-pocket costs reach $4,550.

In January 2011, Part D enrollees who enter the donut hole will receive a 50 percent discount on brand-name and biologic drugs in the coverage gap.

What does it mean to me?
2010: If you’re receiving Medicare benefits and are not already receiving Medicare Extra Help and your prescription drug coverage reaches the donut hole in 2010, you will automatically be mailed a one-time $250 rebate check. There is nothing you need to do. Checks are being mailed monthly throughout the year as beneficiaries reach the “donut hole.”

2011: The 50 percent discount will be applied to all brand-name and biologic drugs in the donut hole. This can mean significant out-of-pocket savings for you.

In the future: By 2020, the coverage gap will be closed, meaning there will be no more “donut hole,” and you will only pay 25 percent of the costs of your drugs until you reach the yearly out-of-pocket spending limit.

Where can I learn more?
IBXmedicare.com

Early retiree reinsurance (effective June 1, 2010)

What is the early retiree reinsurance?
The U.S. Department of Health and Human Services (HHS) will reimburse participating employment-based programs for a portion of the cost of providing health coverage to early retirees (age 55 or older, non-active employees, ineligible for Medicare) and eligible spouses, surviving spouses, and dependents.

What does it mean to me?
Eighty percent of retiree claims between $15,000 and $90,000 within employer-based health plans will be reimbursed.

Where can I learn more?
If your company meets the eligibility requirements, you may apply now for the temporary early retiree reinsurance program through the Health and Human Services website, where you’ll find the application and fact sheets, FAQs, and instructions. However, keep in mind that there is a limited amount of money available, and that thousands of applications have already been submitted.

100 percent coverage for preventive care (effective October 1, 2010)

What is 100 percent coverage for preventive care?
Individual, group, and self-funded health insurance plans must cover certain preventive care services without member costsharing. Grandfathered plans are exempt.

What does it mean to me?
IBC members will not be charged for certain preventive care services, such as cancer screenings or child immunizations.

What is IBC doing to help?
All non-grandfathered plans will now include 100 percent coverage for preventive services. For small employers, Independence Blue Cross recently introduced Blue Solutions, a new suite of products that comply with health care reform and are designed specifically for the needs of small employers.

Where can I learn more?
Blue Solutions

Coverage for Preventive Services

Extension of coverage for dependents to age 26 (effective October 1, 2010)

What is the extension of health care benefits for dependents to age 26?
Generally, all group plans that offer dependent coverage must make that coverage available until the dependent’s 26th birthday, regardless of the dependent’s marital or student status. As an exception to this general rule, until 2014, grandfathered group plans are not required to cover adult dependents if the adult dependent is eligible for coverage through the adult dependent’s employer.

What does it mean to me?
If your current plan includes dependent coverage, you will be able to keep/add dependents on your policy until they reach the age of 26. As discussed above, if you are a grandfathered plan you may not have to cover adult dependents to 26 if the adult dependent is eligible for coverage through the adult dependent’s employer.

When is coverage to 26 effective?
Check with your benefits administrator about when your extension of dependant coverage is effective. Generally, health care reform became effective for plan years that began on or after September 23, 2010. For most of Independence Blue Cross’s groups, health care reform, including coverage of dependents to 26, becomes effective when the group renews its coverage with IBC after September 23, 2010. For example, if a group renewed with IBC on October 1, 2010, health care reform, including coverage of dependents to 26, became effective on October 1, 2010. As another example, if a group renews with IBC on July 1, 2011, health care reform, including coverage of dependents to 26, will become effective on July 1, 2011.

How to reinstate your child’s coverage.
Individuals under the age of 26 who were denied coverage (or were not eligible for coverage), because of age or a change in student status, are eligible to reenroll in their health plan. Individuals may request enrollment for their dependent children for 30 days from the date of notice. Enrollment will be effective retroactively to the first day of the first plan year or the anniversary of the plan’s renewal beginning on or after September 23, 2010. For more information, contact your plan administrator.

Where can I learn more?
If you have an individual plan and have dependent children over age 26 in need of health insurance, be sure to visit ibx4you.com, or call 1-800-263-1410 for more information about our individual coverage options, or visit Dependent to age 26 FAQs.

If you are covered through your employer’s health plan, your benefits administrator can tell you when your plan renews and when your adult dependents can be added to your coverage.

Non-discriminatory plans (effective October 1, 2010)

What does the law say about nondiscriminatory plans?
Fully insured group plans are prohibited from establishing eligibility rules for coverage that favor highly compensated individuals. The benefits under such plans may not discriminate in favor of this group either. Grandfathered plans are exempt.

What does it mean to me?
Employers with non-grandfathered fully insured group health plans will need to make sure that their benefits plans comply with this provision beginning on the first renewal after September 23, 2010.

Rescissions ban (effective October 1, 2010)

What is the ban on rescissions?
A new ban on rescissions prohibits all health plans — even grandfathered plans — from rescinding coverage of subscribers, except in cases involving fraud, nonpayment of premium, or intentional misrepresentation of material facts under the terms of the health plan.

What does it mean to me?
You may not be retroactively cancelled from your plan unless you provide fraudulent information or do not pay your premiums. Prior notice must be provided at time of cancellation, and any cancellation must not violate the law.

What is IBC doing to help?
Independence Blue Cross remains in compliance with the new law and does not rescind coverage except in cases where a subscriber has committed fraud.

High risk pool/PA Fair Care (effective July 2010)

What is the high-risk pool?
The pool provides temporary, transitional health coverage to U.S. citizens and nationals, lawfully present in the United States, who have been uninsured for at least six months, have a preexisting medical condition , and are unable to afford or have access to individual coverage in the period before health insurance exchanges are operating in 2014.

What does it mean to me?
Funding is limited for this program; the pools are scheduled to remain available until January 1, 2014, or until funding exhausts. If you qualify, apply now.

Where can I learn more?

• PA Fair Care

Change in Medicare enrollment period (effective March 23, 2010)

What is the change in the Medicare enrollment period?
People with Medicare can enroll in a Medicare Advantage plan or Part D plan during the six-week annual election period (AEP), from November 15 through December 31 for 2010, and from October 15 through December 7 for every year after. Previously, you could also switch plans — from one carrier’s plan to another or within the same carrier — during the open enrollment period (OEP), from January 1 through March 31. Beginning in 2010, however, the only time most seniors may enroll in a Medicare Advantage Plan is during AEP.

What does it mean to me?
Seniors may no longer switch plans during the OEP (January 1 through March 31), but a new disenrollment period will extend for 45 days at the start of each year, from January 1 through February 15, when Medicare Advantage enrollees may drop their plans for Original Medicare and enroll in a stand-alone Part D plan. But once most seniors leave Medicare Advantage, they may not reenroll until the next AEP. Medicare Advantage and Part D carriers post the next year’s plans and benefits online, usually in October of the prior year; at that time, you should talk to your insurance company, conduct your research, and make the best decision given your circumstances.

What is IBC doing to help?
Independence Blue Cross helps you navigate the complexities of health care reform’s effect on seniors on our website where you can compare plan options, find a pharmacy, learn more about Medicare, and more.

Where can I learn more?

• IBXmedicare.com
• Medicare.gov

Internal appeals and external reviews (effective October 1, 2010)

What are the changes to the appeals and reviews process?
Non-grandfathered health insurance plans must have in place a protocol for internal appeals and external review for coverage determinations and claims decisions.

What does it mean to me?
The new law requires that insurers inform you of available internal appeals and external review processes, plus offer claimants assistance with the internal appeals and external review processes concerning decisions made by your insurer. Insurers also must allow you to review your file and present additional evidence during the internal appeals process. Your health plan must provide continued coverage pending the outcome of the internal appeals process. However, these provisions do not apply if your plan is grandfathered.

What is IBC doing to help?
Independence Blue Cross will keep its enrollees updated on changes to its internal appeals and external review processes. IBC intends to comply with the new provisions of health care reform as they pertain to the internal appeals and external review processes and will provide you with ongoing updates and information as we implement the new regulations.

Elimination of lifetime maximums and restrictions on annual limits (effective October 1, 2010)

What are the changes to lifetime and annual limits on care?
All health plans, including grandfathered plans, are prohibited from imposing limits on the dollar value of essential health benefits during your lifetime; they may, however, impose an annual limit on the dollar value of such benefits for plans that go into effect before 2014. For plan years after January 1, 2014, plans will be prohibited from imposing any annual dollar limits on essential health benefits.

What does it mean to me?
A need for costly medical care will not exhaust your health plan coverage going forward, and if your lifetime benefits were exhausted prior to the new law taking effect, you may be able to reinstate your coverage. IBC is eliminating annual and lifetime limits on all plans effective October 1, 2010, and will not phase in these limits as the law stipulates.

The law defines restricted annual limits as:

• $750,000 for plan years beginning on or after September 23, 2010, but before September 23, 2011
• $1.25 million for plan years beginning on or after September 23, 2011, but before September 23, 2012
• $2 million for plan years beginning on or after September 23, 2012, but before January 1, 2014.

The limits are applied to individuals, so each covered person has his or her own limit. Flexible Spending Accounts (FSA) Health Savings Accounts (HSA) Medical Savings Accounts (MSA) and Health Reimbursement Accounts (HRA) are not subject to the restrictions on annual limits.

What is IBC doing to help?
At Independence Blue Cross, IBC is eliminating annual and lifetime limits on all plans effective October 1, 2010, and will not phase in these limits as the law stipulates.

Prohibition of preexisting condition exclusions for children under 19 (effective October 1, 2010)

What is it?
Most health plans, even grandfathered ones, may not deny coverage of or benefits to children under 19 who have a preexisting condition . New rules issued by HHS allow for insurers to set specific enrollment times for the coverage. Prohibition of preexisting condition exclusions will extend to adults in 2014. Currently, this prohibition does not apply to grandfathered individual health insurance coverage.

What does it mean to me?
If you are the parent or guardian of a child under 19, your health plan may not deny your child coverage or benefits based on a preexisting condition. If such coverage was previously denied, contact your health plan to reapply for coverage once the provision goes into effect.

Coverage for emergency services (effective October 1, 2010)

What is it?
The law provides that individual plans, group health insurance plans, and self-funded plans that cover hospital emergency services must do so without prior authorization, whether the provider participates in the health plan’s network or not. A subscriber’s costsharing requirements for out-of-network emergency services must be the same as those applied to in-network services. Grandfathered plans are exempt.

What does it mean to me?
You will be paying the same level of costsharing for emergency services regardless of whether you stay in-network or go out of the network for the emergency services. Out-of-network providers may, however, also balance-bill payments for the difference between the providers’ charges and the amount collected from the plan and from your copayment or coinsurance amount.

What is IBC doing to help?
Independence Blue Cross currently complies with this provision.

Quality of care reporting (effective September 23, 2010)

What is the quality of care reporting requirement?
The quality of care reporting requirement provides that all individual, group, and self-funded plans — with the exception of grandfathered plans — must submit an annual report to the U.S. Department of Health and Human Services (HHS), and to enrollees during the open enrollment period, to describe how the health plan’s benefits and provider reimbursement policies improve quality of care, including wellness and health promotion activities.

What does it mean to me?
You will receive information on your plan’s quality and wellness programs during the open enrollment period.

What is IBC doing to help?
Independence Blue Cross is an industry leader in offering you high-quality preventive and wellness programs, and you can count on us to continue to lead by providing full disclosure on the quality and effectiveness of these services.

Choosing doctors

What changes are there to a member’s ability to choose his or her primary care physicians?
All health plans — except those that are grandfathered — must allow members to designate any participating primary care physician or pediatrician (for a child) who is available to accept the member when that designation is required by the plan.

What does it mean to me?
You may choose any participating primary care physician, and you do not need a referral to see that doctor. The participating primary care physician list includes pediatricians. Additionally, you have direct access to an OB/GYN, and you do not need a referral to see that doctor.

What is IBC doing to help?
IBC currently complies with this provision.

Key provisions taking effect in 2011:

Tax changes to health care savings and spending accounts
Medical loss ratio rebates

New out-of-pocket maximums

A new maximum out-of-pocket (MOOP) limit, mandated by the Centers for Medicare & Medicaid Services, is now in effect for Medicare Advantage HMO and PPO members. Once members have reached this limit, they will not be liable for any additional claim costs (Part A and B) for the remainder of the calendar year.

For 2011, the following amounts apply:

• HMO members: $6,700.
• PPO members: $6,700 for in-network services, and $10,000 for in-network and out-of-network services combined.

The following deductible, copay, and coinsurance amounts will be included in the MOOP:

• medical (Medicare Part A and B services);
• mental health (Medicare Part A and B services);
• pharmacy (Medicare Part B drugs only).
• Part D drugs do not count toward the MOOP and will continue to be part of the existing true out-of-pocket costs limit.

Tax changes to health care savings and spending accounts

This provision changes how you may use distributions from Health Savings Accounts (HSAs), Flexible Spending Accounts (FSAs), Archer Medical Spending Accounts (MSAs), and Health Reimbursement Accounts (HRAs). You may no longer use this money taxfree to pay for over-the-counter medications and drugs, excluding insulin and doctor-prescribed medications.

What does it mean to me?
You will not be able to use any of these accounts for almost all over-the-counter drugs. A tax penalty on distributions from HSAs that are not used for qualified medical expenses increases from 10 percent to 20 percent; for MSAs it increases from 15 percent to 20 percent of the amount includable in gross income.

Where can I learn more?
IRS.gov

Medical loss ratio rebates

The law requires that at least 80 percent of premiums that health insurers collect must be applied to medical care for subscribers covered by individual health insurance plans and small employers and at least 85 percent of premiums must be applied to medical care for subscribers covered by large employer-based health plans. This amount is known as the medical loss ratio (MLR).

Insurers that don’t meet these requirements may be required to issue customer rebates. The Department of Health and Human Services (HHS) will determine whether any rebate would be issued to the group or directly to the individual member. This provision applies to all plans except self-funded plans.

What does this mean to me?
Independence Blue Cross is a nonprofit health insurer and is accountable to our subscribers, their employers, and their doctors. Currently, Independence Blue Cross uses 89.5 cents of every premium dollar to pay for our members’ care.

Where can I learn more?
Sherlock Report: Administrative expenses of health plans

Key provisions taking effect in 2012:

Women’s preventive health coverage

W-2 disclosure of health plan value

The provision requires employers to disclose the aggregate value of an employee’s employer-sponsored coverage for the year on the employee’s 2012 W-2 Form, which will first be distributed in early 2013.

Women’s preventive health coverage

This provision of the health care reform law requires all health insurers to eliminate member cost-sharing for an expanded list of women’s preventive services when they are recieved in-network.

What does it mean for me?
Presently, IBC commercial health plans include coverage at 100 percent for six of the eight preventive services on the expanded list. They are:

• well-woman visits;
• screening for gestational diabetes;
• counseling for sexually transmitted diseases;
• screening and counseling for HIV;
• screening for human papillomavirus (HPV);
• screening and counseling for interpersonal and domestic violence.

The federal rule also eliminates member cost-sharing for certain breastfeeding services and for all FDA-approved methods of contraception. Independence Blue Cross (IBC) is updating all fully-insured, non-grandfathered commercial medical and prescription drug plans to eliminate member cost-sharing as required by the law on August 1, 2012. For self-funded customers, this update will be on the group’s first renewal on or after August 1, 2012. Medicare Supplement, Medicare Advantage, and grandfathered plans are not impacted by this rule.

Can I exclude contraceptive coverage from my plan(s)?
Customers who satisfy certain Department of Health and Human Services (HHS) regulations may either be exempt from including contraceptive coverage in their medical and/or prescription drug plans, or may be eligible for a one-year safe harbor exclusion to extend the date of implementation of contraceptive coverage until August 1, 2013. Customers who are eligible fall under one of the two following categories:

• A Religious Employer is one that meets all of the following provisions:
  • Has the inculcation of religious values as its purpose;and
  • primarily employs and serves persons who share its religious tenets;and
  • is a non-profit organization under Internal Revenue Code section 6033 (a)(1) and section 6033 (a)(3)(i) or (iii) 45 C.F.R. 147.130(a)(1)(iv)(B).
• The Safe Harbor Provision is available only to non-exempted, non-grandfathered group health plans that meet all four of the following criteria:
  • Organized and operates as a non-profit entity; and
  • From February 10, 2012 and onward, the plan established or maintained by the organization has not provided contraceptive coverage at any point, consistent with any applicable state law, because of the organization’s religious beliefs; and
  • The plan must give participants a specified notice – on any application materials distributed in connection with enrollment (or re-enrollment) in coverage that is effective beginning on the first day of the first plan year that is on or after August 1, 2012 – stating that contraceptive coverage will not be eligible for that plan year; and
  • The organization self-certifies - via the Certification Form signed by an authorized organizational representative – that it satisfies these all of the above criteria.

If you believe your organization falls under one of these two categories, complete the Certification Form and email it to: WomensPreventiveHealthCare@ibx.com or fax 215-238-2326 by June 8, 2012.

Flexible spending account (FSA) limits

The law says FSAs may not allow employees to annually defer salary in excess of $2,500 into a health care FSA. Employers have the option to limit their employees' annual elections further.

What does it mean to me?
Effective for tax years beginning after December 31, 2012, your maximum pretax contribution is $2,500. Further salary deferrals are not allowed.

Where can I learn more?
Check with your employer’s health benefits administrator if you have questions regarding FSA limits.

Medicare payroll tax

The Medicare payroll tax will increase by 0.9 percent on individuals making more than $200,000 and couples making more than $250,000. Unearned income, which has been exempt from the payroll tax, will be subject to a 3.8 percent tax.

Medical device sales tax

Medical device manufacturers will pay a 2.9 percent sales tax on products sold, excluding eyeglasses, contact lenses, and hearing aids. If you require a medical device, such as a heart pacemaker or other device included in the sales tax, the manufacturer’s increased cost may be passed on to you.

Key provisions taking effect in 2014:

Mandatory insurance for individuals
Mandatory insurance for employers
Federal subsidies to buy insurance
State-based Health Exchanges
Essential benefits requirement
Exclusion prohibition for preexisting conditions
Expansion of Medicaid

Mandatory insurance for individuals

The law requires everyone to purchase health care coverage by 2014 or pay a penalty.

What does it mean to me?
If you are not covered, and do not purchase insurance as of January 1, 2014, the federal government will charge you a penalty of $95, or 1 percent of your income. The penalties increase each year to a total of 2.5 percent of income or $695, whichever is greater by 2016.

Mandatory insurance for employers

Employers with more than 50 employees who do not offer health benefits and whose workers get subsidized coverage through an exchange, will be charged a $2,000 fee for each uninsured employee. The first 30 employees are exempt from the penalty.

Federal subsidies to buy insurance

Consumers who purchase coverage on their own may qualify for federal subsidies to help offset premiums. The Congressional Budget Office estimates that about 20 million American households will be eligible for subsidies. Federal agencies will determine how subsidies will be paid.

State-based Health Exchanges

New state-based exchanged will be set up in 2014 where consumers and small businesses can simply and quickly shop for health insurance and compare products and prices. Exchanges will work with state insurance departments to set and enforce insurance reforms and protections.

Essential benefits requirement

essential health benefits

What does it mean to me?
Your qualified health plan, will be required to provide a range of benefits determined as “essential.” Some preventive care services will be included as well, as recommended by the Centers for Disease Control and Prevention. In addition, the plans must cover pediatric services, including vision and oral care.

Exclusion prohibition for preexisting conditions

Health plans, even grandfathered ones, may not deny coverage of or benefits to individuals who wish to purchase health insurance. In 2010, exclusion due to a pre-existing condition was prohibited for individuals under 19, and that prohibition now includes adults in 2014.

Expansion of Medicaid

From 2014 to 2016, the federal government will pay all costs for covering newly eligible Medicaid beneficiaries. The income allowance for Medicaid will increase to 133 percent of the federal poverty level. If you are among the 15 million uninsured and Medicaid-eligible during this two-year period, you may want to consider applying for this federal-state program.

Where can I learn more?
HHS Centers for Medicare and Medicaid Services

Mandatory insurance for individuals — penalty increase

The law requires everyone to purchase health care coverage by 2014 or pay a penalty. In 2015, the $95 or 1 percent penalty increases to the greater of $325 or 2 percent of income.

Mandatory insurance for individuals — penalty increase

The law requires everyone to purchase health care coverage by 2014 or pay a penalty. In 2016, the $325 or 2 percent penalty increases to the greater of $695 or 2.5 percent of income.

Coverage across state lines

This allows consumers to purchase health insurance from insurers outside of their state. The theory holds that competition will foster lower prices for health coverage. If you are considering purchasing health coverage for you, your family, or your business, you would be able to consider coverage options outside of the state in which you reside or operate your business.

Large company exchange participation

Companies with more than 100 employees may be allowed to participate in state-based health exchanges. An exchange is a national or state-by-state marketplace where consumers and small businesses can simply and quickly shop for health insurance and compare products and prices. Exchanges would work with state insurance departments to set and enforce insurance reforms and protections.

Excise tax on “Cadillac plans”

This provision adds a 40 percent nondeductible excise or “Cadillac” tax on generous health plans ($27,500 for a family plan and $10,200 for an individual plan). If you are covered by a comprehensive health plan with no deductible or otherwise have a plan that would be considered a “Cadillac” plan, the amount you spend on that plan will be taxed at the rate of 40 percent beginning in 2018.

Elimination of “donut hole” coverage

By 2020, the coverage gap will be closed, meaning there will be no more “donut hole,” and you will only pay 25 percent of the costs of your drugs until you reach the yearly out-of-pocket spending limit.