Impact of the Law on Benefits
When the Affordable Care Act went into effect on January 1, 2014, the following rights and protections become law, unless otherwise noted in the content.
Under the health care reform law, lifetime dollar limits? on essential health benefits are no longer allowed.1
Annual dollar limits will also be prohibited although grandfathered plans (plans in place on or before March 23, 2010) are exempt from this change and may continue to include annual limits. Refer to plan materials to determine grandfathered status.1
Members participating in approved clinical trials will be covered for certain benefits under the Affordable Care Act (ACA). Approved clinical trials are federally funded, funded by a government agency or funded by a non-government agency recognized by the National Institutes of Health.
Coverage will extend to medical conditions and side effects related to the trial, as well as routine medical care required by the member. Any investigative drugs, items, devices or services will not be covered.
As with other aspects of the ACA, grandfathered plans are exempt from these changes in clinical trial coverage.
The Affordable Care Act (ACA) requires that all health care plans cover Essential Health Benefits. Among these benefits are pediatric vision and pediatric dental coverage for members under the age of 19. CareFirst has decided to embed these benefits in all of its ACA plans, which means that the premium shown for a CareFirst plan will include both pediatric vision and pediatric dental coverage. These changes only impact groups under 50 employees.
Members who receive emergency care from an out-of-network? hospital cannot be required to pay a higher copay or coinsurance amount by their insurer. Nor do they have to receive prior approval to use out-of-network emergency room services. Grandfathered health plans are exempt from this ACA provision.2
Note: Most CareFirst plans already cover out-of-network emergency care as in-network.
With the exception of grandfathered plans, any plans sold or renewed in the small group market – both on and off the exchange – will need to provide coverage for a comprehensive set of services known as Essential Health Benefits (EHB). Many of these benefits are already in CareFirst’s medical plans, but annual and lifetime dollar limits have been removed. The EHBs are:
- Emergency services
- Laboratory services
- Maternity and newborn care
- Mental health and substance use disorder services (including behavioral health treatment)
- Prescription drug coverage (included as part of the medical plan)
- Rehabilitative and habilitative services and devices (helping maintain daily functioning)
- Prevention, wellness and chronic disease management services
- Pediatric dental and vision coverage (for small groups only)
- Outpatient or ambulatory care
In 2012, the IRS (IRS Bulletin 2012-26) placed a $2,500 limit on salary reduction contributions to a health Flexible Spending Account (FSA) for each employee. As a result, $2,500 (as indexed for inflation) is the maximum salary reduction contribution an employee may make for a plan year.
For 2015, the IRS has also increased contribution limits for Health Savings Accounts (HSAs) and for out-of-pocket spending amounts under high-deductible health plans (HDHP).3
- Annual contribution limits: $3,350 for self-only coverage and $6,650 for family coverage.
- HDHP out-of-pocket maximum (deductibles, copays, and other amounts - but not premiums): $6,450 for self-only coverage and $12,900 for family coverage.
The ACA bans annual limits on the dollar value of essential health benefits; however, Health Reimbursement Arrangements (HRAs) usually include a maximum dollar amount of benefits per coverage period. These limits put standalone HRAs in violation of ACA provisions. In 2014, an HRA must be integrated with a group medical plan that complies with the ACA rules (no limits in place). To qualify as integrated with an employer-sponsored plan, the HRA must only be open to employees covered by the plan. Additional information is expected from the IRS.
Effective January 1, 2015, the in-network out-of-pocket for large groups, the maximum cannot exceed $6,450 for self-only coverage and $12,900 for family coverage.
- A member cannot be turned down or charged more for health insurance because of a pre-existing medical condition.4
- A member cannot be denied coverage for pre-existing conditions once the insurance has started.
- A member is covered immediately for pre-existing conditions.
Rescission is the term used when coverage is discontinued or cancelled retroactively. Under the provisions of the ACA, a member’s coverage can only be rescinded in cases of fraud or intentional misrepresentation of a material fact. If the misrepresentation of a material fact is inadvertent, rescission is not permitted.
Notice of rescission must be provided in writing 30 calendar days in advance, and must include an explanation of the member’s right to appeal.
Several provisions of the ACA were designed to promote wellness efforts by insurers, employers and individuals. These new wellness rules will apply to group health plans including grandfathered plans.
There are currently two types of wellness programs – participatory and health contingent.
Participatory programs simply require that an individual takes part. Rewards are not offered or, if they are, are not contingent on results - only participation. Examples include:
- Programs that partially or fully reimburse employees for joining a fitness center.
- Rewards or reimbursement for a smoking cessation program, regardless of whether an employee quits smoking.
Health-contingent wellness programs offer a reward based on measurable health improvements and are divided into two types, activity-only and outcome-based.
- Activity-only programs require participants to perform or complete an activity, without attaining or maintaining a specific health outcome. This can include walking or dieting.
- Outcome-based programs require participants to attain or maintain specific health outcomes such as quitting smoking, reducing BMI, or lowering glucose, cholesterol or blood pressure levels.
Health-Contingent wellness programs must also meet the five requirements of the Health Insurance Portability and Accountability Act (HIPAA) wellness rule, which are:
- Annual Qualification
- Limit on Amount of Reward
- Reasonable Design
- Reasonable Alternative
- Notice of Reasonable Alternative
For additional information on these five requirements, please visit Incentives for Nondiscriminatory Wellness Programs in Group Health Plans.
As of September 23, 2010, dependents are covered through age 26 even if:
- They are not financially dependent on the subscriber,
- They are not claimed as a dependent on tax returns,
- They do not reside with the subscriber,
- They are not a student,
- They are married.
This information is provided for informational purposes only and should not be relied on as legal or tax advice.