NY Times – New Rules on Changes to Benefits

- The White House/HHS issuing new rules on trigger events that would eliminate the employer health plan exemption on healthcare reform provisions

- Goal is to allow people to “retain their insurance if they like it” promise made as part of healthcare reform

• The law provides exemption or “grandfather clause”, plans that make changes in deductibles, co-payments, or benefit levels lose their exemption
• According to White House estimates  -  50% of group plans would be impacted by 2013
• The rules allow insurers and employers to increase benefits but reductions in coverage or higher costs to consumers will trigger the loss

1. ALL plans, regardless of exemptions must eliminate lifetime coverage restrictions and are prohibited from dropping people when they get sick
2. Grandfathered plans do not have to provide essential benefits packages or free preventative care

- Exemption is eliminated under the following circumstances:

• Elimination all benefits for a certain condition
• Increases deductibles or copays  by a rate of medical inflation plus 15%
• Employer reduces its share of contributions by more than 5%.
• Any increase on a fixed percentage of the cost of the operation
• Any reduction in annuals caps (not lifetime caps as they are eliminated for everyone)

PWC Study – Employers to See 2011 Medical Costs Jump

- Employers offering employee health insurance expecting another big increase this year

- Nationally, 50% of companies are reporting the health insurance deductibles are expected to rise to $400  in 2011 from 25% in 2009

- Medical costs are expected to rise by about 9% next year

- Employers with over 5,000 employees are also eliminating subsidies for retiree health from 37% in 2009 to 22% in 2011

KFF - Expecting Big Changes to Medicare Advantage Plans

- Last Monday, Advantage plans submitted their bid for the 2011 year

• Bids are estimates of the costs of benefits to their membership
• Process determines level of benefits and cost sharing amount for the year

- 2011 reimbursement tied to 2010 year

• Benefits expected to either be reduced or have cost increases to members

- HHS Secretary Sebelius sent a letter to insurance companies warning them to not lower benefits levels or increase costs

- Current reimbursement is approximately 15% above costs –

• Under health reform, those payments get reduced

- Will cost the government less but beneficiaries will feel the brunt of the changes

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