July 2010.pdf (2.10 mb)

A number of recent health care reform plans call for the creation of a health insurance “exchange,“ a new entity intended to create a more organized and competitive market for health insurance by offering a choice of plans, establishing common rules regarding the  offering and pricing of insurance, and providing information to help consumers better understand the options available to them.

An exchange is part of the plan aiming for universal coverage. It’s is a key element in providing coverage to the currently uninsured and  in facilitating changes to the insurance market, particularly for those who buy insurance on their own. Some proposals allow employers or employees to purchase coverage through the exchange as well.

Purpose and Function of an Exchange

In the context of a health reform plan aiming for a substantial expansion in the number of people insured and universal access to affordable coverage, there are a number of functions envisioned for exchanges, including:

1. Offering consumers a choice of health plans and focusing competition on price. Exchanges offer enrollees a choice of private health insurance plans, and some proposals also envision including a public, Medicare-like plan. Covered services and cost sharing (i.e., deductibles, coinsurance or co-payments, and out-of-pocket limits) would be organized or standardized in ways that make comparisons across plans easier for consumers. The aim is to focus competition among plans on the price of coverage and minimize the  tendency for plans to vary benefits in order to attract healthier than average enrollees.
2. Providing information to consumers. In conjunction with offering a choice of health plans, an exchange is intended to provide consumers with transparent information about plan provisions such as premium costs and covered benefits, as well as a plan’s  performance in encouraging wellness, managing chronic illnesses, and improving consumer satisfaction. The exchange could also serve a customer assistance function—typical for large employers—to assist consumers who encounter billing or access problems with  their plans.
3. Creating an administrative mechanism for enrollment. For people who obtain private insurance coverage through work, the employer typically facilitates enrollment in a plan and the payment of the premium. This is especially true in larger businesses. An  exchange could serve a similar function for people without access to that kind of assistance, including people buying insurance on their own or who work for small businesses. The exchange could also be used to determine eligibility for and administer income-related subsidies. Alternatively, these functions could be handled by a government agency or through the tax system.
4. Moving towards portability of coverage. Coverage through an exchange can be de-linked from employment, helping to make health insurance more portable for people moving from job to job. However, since employment-based coverage would still exist under  some proposals, insurance may not truly be fully portable. Exchanges also could coordinate enrollment shifts between Medicaid and subsidized private coverage for people with very low and potentially changing incomes.
5. Reforming the insurance market. Another function of an exchange is to facilitate changes in the rules overning how insurers sell coverage. In most states today, people buying insurance in the non-group market can be denied coverage or charged a higher  premium based on a pre-existing health condition. Health insurers are required by federal law to offer health insurance to any small business, but premiums in most states can vary within prescribed limits based on the health status of workers. Many health reform proposals would require insurers to accept all applicants without consideration of the applicant’s health, and would further prohibit or significantly limit premium variation related to health status. Although these types of changes can be implemented simply by  changing insurance laws and do not necessarily require the creation of exchanges, some argue that exchanges can make these insurance market reforms more effective by monitoring marketing practices and administering a uniform system for enrolling in a health  insurance plan.

www.kff.org/

Survey shows that 58% of employees would consider voluntary disability if made avaiable by their employer - the highest percetage of any coverage mentioned.  - Guardian Omnibus Survey, February 2010

17.6% of the population in Arkansas aged 21-64 years reported a disability in 2008. Thats more than any of the surrounding states.

Missouri: 14.1%
Oklahoma: 16.5%
Texas: 11.6%
Louisiana: 14.9%
Mississippi: 16.7%
Tennessee: 14.8%

Source: http://www.statehealthfacts.org/

Download our April newsletter and stay up to date on the key issues that interest you.

April 2010.pdf (1.61 mb)

The American Recovery and Reinvestment Act of 2009 (ARRA), as amended by the Department of Defense Appropriations Act (2010 DOD Act) on December 19, 2009 and the Temporary Extension Act of 2010 (TEA) on March 2, 2010, provides for premium reductions for health benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985, commonly called COBRA. Eligible individuals pay only 35 percent of their COBRA premiums; the remaining 65 percent is reimbursed to the coverage provider through a tax credit. The premium reduction applies to periods of health coverage that began on or after February 17, 2009 and lasts for up to 15 months.

To qualify, individuals must experience a COBRA qualifying event that is the involuntary termination of a covered employee's employment. The involuntary termination must generally occur during the period that began September 1, 2008 and ends on March 31,  2010. However, TEA also provides that an involuntary termination of employment is a qualifying event for purposes of ARRA if the involuntary termination:

• Occurs on or after March 2, 2010 and no later than March 31, 2010; and
• Follows a qualifying event that was a reduction of hours that occurred at any time from September 1, 2008 through March 31, 2010.

TEA extended the COBRA premium reduction eligibility period for one month until March 31, 2010. TEA also expanded eligibility to individuals who experience a qualifying event that is a reduction of hours occurring at any time from September 1, 2008 through March  31, 2010, which is followed by an involuntary termination of employment on or after March 2, 2010 through March 31, 2010. This expansion also includes a second election opportunity for these individuals who had a reduction of hours qualifying event  followed by an involuntary termination, if they did not elect COBRA continuation coverage when it was first offered OR elected but subsequently discontinued COBRA.

ARRA, as amended by TEA, mandates that plans notify certain current and former participants and beneficiaries about the premium reduction. The Department has updated its existing models and created several additional models to help plans and individuals  comply with these requirements. Each model notice is designed for a particular group of individuals and contains information to help satisfy ARRA's notice provisions, including those added by TEA.

Plans subject to the Federal COBRA provisions must provide a General Notice to all qualified beneficiaries, not just covered employees, who experienced a qualifying event at any time from September 1, 2008 through March 31, 2010, regardless of the type of  qualifying event, and who have not yet been provided an election notice. Plans must provide the updated General Notice within the required timeframes for providing a COBRA election notice. The updated model General Notice includes information on the premium reduction as well as information required in a COBRA election notice.

Plans that are subject to COBRA continuation provisions under Federal or State law should provide a Notice of New Election Period to ALL individuals who:

• Experienced a qualifying event that was a reduction of hours at any time from September 1, 2008 through March 31, 2010;
• Subsequently experience a termination of employment at any point from March 2, 2010 through March 31, 2010; AND
• Either did not elect COBRA continuation coverage when it was first offered OR elected but subsequently discontinued COBRA.

During the time periods described above, individuals (and their family members) who experience an involuntary termination of employment after experiencing a qualifying event that consists of a reduction of hours MUST be provided this notice within 60 days of the  termination of employment. The Department has reated a model Notice of New Election Period. Using this model satisfies the requirements of ARRA, as amended by TEA.

Plan administrators must also provide notice to certain other individuals who have already been provided a COBRA election notice that did not include information regarding ARRA, as amended by TEA. The Department has developed two models to assist plans in  these areas.

The Supplemental Information Notice is required to be sent by plans that are subject to COBRA continuation provisions under Federal law and insurers subject to continuation coverage requirements under State law. It should be provided to ALL individuals who  elected and maintained continuation coverage based on the following qualifying events:

• Terminations of employment that occurred at some time on or after March 1, 2010 for which notice of the availability of the premium reduction available under ARRA was not given; or
• Reductions of hours that occurred during the period from September 1, 2008 through March 31, 2010 which were followed by a termination of the employee's employment that occurred on or after March 2, 2010 and by March 31, 2010.

During the time periods described above, individuals (and their family members) who experience an involuntary termination of employment after experiencing a qualifying event that consists of a reduction of hours MUST be provided this notice within 60 days of the  termination of employment. Individuals with qualifying events that occurred at some time on or after March 1, 2010 for which notice of the availability of the premium reduction available under ARRA was not given MUST be provided this notice before the end of the required time period for providing a COBRA election notice.

The Notice of Extended Election Period is required to be sent by plans that are subject to COBRA continuation provisions under Federal law and insurers subject to continuation coverage requirements under State law. It must include the information described above  and be provided to ALL individuals who experienced a qualifying event that was a termination of employment at some time on or after March 1, 2010, were provided notice that did not inform them of their rights under ARRA, as amended by TEA, and either chose  not to elect COBRA continuation coverage at that time OR elected COBRA but subsequently discontinued that coverage. This notice MUST be provided before the end of the required time period for providing a COBRA election notice. The Department has created a  model Notice of Extended Election Period. Using this model satisfies the requirements of ARRA, as amended by TEA.

Insurance issuers that provide group health insurance coverage must provide notice to persons who became eligible for continuation coverage under a State law. The Department updated its model Alternative Notice to assist issuers with satisfying this requirement.  However, continuation coverage requirements vary among States and issuers should modify this model notice as necessary to conform it to the applicable State law. Issuers may also find one (or more) of the other models appropriate for use in certain situations.

Switching Benefit Options

If an employer offers additional coverage options to active employees, the employer may (but is not required to) allow assistance eligible individuals to switch the coverage options they had when they became eligible for COBRA. To retain eligibility for the ARRA  premium reduction, the different coverage must have the ame or lower premiums as the individual's original coverage. The different coverage cannot be coverage that provides only dental, vision, a health flexible spending account, or coverage for treatment that is  furnished n an on-site facility maintained by the employer.

Income limits

If an individual's modified adjusted gross income for the tax year in which the premium assistance is received exceeds $145,000 (or $290,000 for joint filers), then the amount of the premium reduction during the tax year must be repaid. For taxpayers with adjusted gross income between $125,000 and $145,000 (or $250,000 and $290,000 for joint filers), the amount of the premium reduction that must be repaid is reduced proportionately. Individuals may permanently waive the right to premium reduction but may not later  obtain the premium reduction if their adjusted gross incomes end up below the limits. If you think that your income may exceed the amounts above, consult your tax preparer or contact the IRS at www.irs.gov.

New Penalty Provision

TEA also provides that the appropriate Secretary may assess a penalty against a plan sponsor or health insurance issuer of up to $110 per day for each failure to comply with such Secretary’s determination 10 days after the date of the plan sponsor’s or issuer’s  receipt of the determination.

The premium reduction for COBRA continuation coverage is available to "assistance eligible individuals". An "assistance eligible individual" is the employee or a member of his/her family who elects COBRA coverage timely following a qualifying event related to an involuntary termination of employment that occurs at any point from:

• September 1, 2008 through March 31, 2010; or
• March 2, 2010 through March 31, 2010 if:
  • The involuntary termination follows a qualifying event that was a reduction of hours; and
  • The reduction of hours occurred at any time from September 1, 2008 through March 31, 2010.
• A reduction of hours is a qualifying event when the employee and his/her family lose coverage because the employee, though still employed, is no longer working enough hours to satisfy the group health plan’s eligibility requirements.
  
• Generally, the maximum period of continuation coverage is measured from the date of the original qualifying event (for Federal COBRA, this is generally 18 months). However, ARRA, as amended by TEA, provides that the 15 month premium reduction period begins on the first day of the first period of coverage for which an individual is “assistance eligible.” This is of particular importance to individuals who experience an involuntary termination following a reduction of hours. Only individuals who have additional periods of COBRA (or state continuation) coverage remaining after they become assistance eligible are entitled to the premium reduction.
• For purposes of ARRA, COBRA continuation coverage includes continuation coverage required under Federal law (COBRA or Temporary Continuation Coverage) or a State law that provides comparable continuation coverage (for example, so-called "mini-COBRA" laws).
• Those who are eligible for other group health coverage (such as a spouse's plan) or Medicare are not eligible for the premium reduction. There is no premium reduction for periods of coverage that began prior to February 17, 2009.
• Assistance eligible individuals who pay 35 percent of their COBRA premium must be treated as having paid the full amount. The premium reduction (65 percent of the full premium) is reimbursable to the employer, insurer or health plan as a credit against certain employment taxes.