Implementation of the ACA market reforms began almost as soon as the law was enacted in 2010. Since its effective date, the ACA has removed pre-existing condition limitations for children, mandated that children are eligible up to age 26, required 100% preventive care coverage for non-grandfathered plans, capped health FSA elections, and imposed a new Medicare payroll tax.
Additional plan changes went into effect with medical plan year renewals in 2014:
- All pre-existing condition limitations were removed;
- Waiting periods are limited to no more than 90 days; and
- Out-of-pocket limits in non-grandfathered plans must include deductibles and co-pays.
In 2014, small employer non-grandfathered medical plans were further required to:
- Cover essential health benefits with no dollar limits;
- Be categorized into metal tiers; and
- Be billed at rates based on each covered person’s age.
Pending guidance, other key market reforms include nondiscrimination rules for insured plans and the 2020 “Cadillac plan” excise tax for high cost plans.
To fund the costs of health care reform, the ACA includes several new fees in medical plans:
Transitional Reinsurance Fee. This temporary fee imposed on medical plans is intended to help stabilize the individual marketplace due to the anticipated initial influx of uninsured. The rate was $63 per covered individual in 2014, and reduced to $44 per covered individual in 2015. The fee further reduces to $27 per covered individual in 2016, which is the final year the fee is charged. Medical carriers include the fee in premiums. Medical carriers and employers sponsoring self-insured plans (or the TPAs) report enrollment and pay the fees to CMS through www.pay.gov.
Insurance Industry Fee. All insurance carriers pay a fee to fund the costs of reform. Preliminary estimates range from 2-2.5% of premium in 2014, increasing to 3-4% in 2015. Insurance carriers pay the fee directly. Self-insured plans are exempt.
Patient-Centered Outcomes Research Institute (PCORI) Fee. This fee is assessed annually on all medical plans until it expires in 2019. The fee for plan years ending prior to October 1, 2014 was $2 per covered life. For plan years ending October 1, 2014 through September 30, 2015, the fee increased to $2.08 per covered individual per year. Medical carriers pay the fee directly, while self-insured plans (including health FSAs that are not considered an excepted benefit and HRAs) must file a Form 720 and pay the fee directly to the IRS by July 31st after the end of the plan year. Keller assists our clients with completion of the Form 720.