1. If you change to better coverage across carriers (i.e. from Aetna to BCBSIL), will you still lose grandfathered status (GFS)?
Answer: Yes, any “new contract” that is issued on or after the effective date of the law will lose grandfathered status. Any changes outside of the BCBSIL group block roll will cause your group to lose grandfathered status. This includes employers changing contribution strategies by more than 5%. Note: the Interim Final Regulations did specify that if block changes were filed/ approved before the law passed and were in the process of implementation after the passage of the law, those “block changes” (only) would not affect the groups’ grandfathered status if those were the only changes that were occurring at the renewal. The Interim Final Regulations were quite clear that moving to a new carrier (even if it is for 100% redundant benefits or an upgrade in benefits) will cause your group to lose grandfathered status—because by moving to a new carrier, you will cause a “new contract” to be issued.
2. Who is providing the loss ratio/summary of claims to the employers and where is that information getting submitted to?
Answer: I need to clarify this slide (I can see how it was misinterpreted). The loss ratio data is required to be maintained AT THE CARRIER LEVEL BLOCKWIDE (small group, large group and individual). This is NOT a group-by-group requirement, and the employers and individuals have zero reporting responsibilities with regard to this component of the legislation.
3. What if your COBRA ends and you go on Individual? Is there an effect on GFS?
Answer: Since there would be a newly issued contract, the individual would lose grandfathered status once they left the group or COBRA coverage.
4. Who is paying for all of this?????
Answer: Most likely your kids, grandkids and their grandkids. I do not believe this is going to come in anywhere near the promised $1 trillion, and I think we will be lucky if we emerge at twice or even three times that cost once the dust settles.
5. Is 100% coverage required for groups only that lose GFS?
Answer: I believe you are referring to the 100% (no cost sharing) for Preventative Care aspect of the bill. If so, that is correct—this provision of the bill only applies to non-grandfathered groups. Grandfathered groups can retain their existing Preventative Care plan design as long as they maintain their grandfathered status.
6. What if you go from BCBSIL Individual to Med Supp at age 65, any effect on GFS?
Answer: The aspects of grandfathering and non-grandfathering do not come into play when people move to Medicare. The law addresses several other minor Medicare coverage adjustments separately (like closing the “donut hole” of Medicare Part D over a few years, etc.), but the compliance issues that face a group or under 65 individual policyholder do not translate or migrate with the member when they move to Medicare (and a Medicare Supplement).
7. What about annual caps on underlying services (i.e. outpatient therapy visit limits, etc.)?
Answer: We are still waiting on a complete definition of the Essential Benefits so we cannot comment on this specific question at this time as the regulatory bodies have not fully weighed in on exactly which benefits are going to be mandated (or not limited) at this time.
8. What age cut-off is considered a child—age 27?
Answer: I am not sure what this question is because the legislation only requires you to cover the dependent child TO AGE 26. The IRS tax code was adjusted to allow a write-off until the year the child turns 27 (just to be safe) so that people with their 26th birthday in February would not have to worry about trying to figure out a partial year’s worth of “imputed income” but in terms of mandating coverage to dependents, PPACA only requires plans to cover kids to age 26. Note this does not have any variance between grandfathered or non-grandfathered status; all plans must comply with this by October 1st. Truthfully, all of our fully insured carriers were voluntarily in compliance with this one by June 1st in order to accommodate graduates (so they were not removing graduates or non-returning students who ceased to be eligible in May or June and then immediately re-enrolling them on October 1st).
9. So if the carrier changes the plan design and not the insured, then the insured could lose their GFS?
Answer: It all has to do with when the carrier filed the plan change. If the carrier filed the block plan changes before the passage of the law, then the members WOULD retain their grandfathered status. However, if a carrier “force rolls” a block after March 23rd and the changes were outside the “narrow curbs” established in the Interim Final Regulations (published June 14th), it would be our expectation that would negate the entire block memberships’ grandfathered status. Obviously, it would surprise us if a carrier took this action at this point and made a unilateral decision to impact an entire block GFS.
10. Is it safe to assume that this applies to all plans, fully insured and partial self-funded too? Or not?
Answer: In the vast majority of the scenarios, yes. There are limited things that self-funded plans can do (for example, change TPAs) that will not affect their GFS but since our agency only works in the fully insured (primarily small group) market, we have not spent much time researching the nuances of “large employer/self funded” requirements.
11. For UHC plans, they exclude infertility for less than 26 employees. Will that be removed?
Answer: As mentioned above, we do not have the final list of “Essential Benefits” yet so we cannot answer this. NON-legislative related (but UHC related since we represent them as well), infertility is an OPTION for groups under 26 lives. It is an “expensive” elective add-on so it is not that it is required to be excluded by UHC, it is simply not defaulted to be included in the preferred quotes for groups with less than 26 lives because the coverage is elective (the requirement to cover it over 26 is actually a state law). Since it is elective and prone to adverse selection, the benefit is priced conservatively.
12. What should we advise our clients to do if they are up for renewal now?
Answer: Based on the information available AT THIS TIME and what we are hearing from our carriers, they are estimating the mandates will cost between 1-5% differential between GFS and non-GFS status in the GROUP plans—subject to plan design swings.
My concern lies far more in individual markets as I believe there are going to be SUBSTANTIAL rating ramifications for the non-grandfathered block down the road—particularly in 2014. Of course, the question then becomes can the individuals afford to maintain their current benefits at their current level until 2014 without making plan changes? This is a real unfortunate situation for the individual market because I think the loss of underwriting/riders is going to have a profound effect on the block pricing compared to “closed blocks” (grandfathered) that enjoyed the benefits of underwriting when they were initially issued. But with medical inflation, time is not on your clients’ side.
It is my personal opinion that our average individual premium (of approximately $3,600 today) will greatly increase closer to where group premiums are today (at approximately $8,000) where we already have a guaranteed issue/no rider/no pre-ex (for continuous coverage) market. I believe with the individual policy market mandate of no pre-ex or annual open enrollment (at this time), the potential for adverse selection will have an EXTREMELY profound (negative) effect on rates.
So for groups, I would be telling them the above (that if they take the relief this year and lose GFS status, it is quite possible that their renewal next year—after the 9/23/10 implementation date—will be increased by 1-5% more than it would be if they maintained GFS). But if you are making a plan change this year for greater than 5%, chances are it may be worthwhile to move (for example, moving from a fully loaded $500 deductible to an HSA-style plan). HOWEVER, if the alternates that they are considering come out 5% or less, I would definitely suggest they “bite the bullet” (if they can afford it) and stay where they are in order to decrease next year’s renewal. |
