Thursday, July 8, 2010

Benefit News - Week of 7/5/2010

Health Care Reform
  • The Congressional Budget Office recently revised their projections concerning the cost of the health care reform legislation. Their revised numbers reflect that it will cost $115 billion more than initially predicted.
  • The National Federation of Independent Business (NFIB) has joined several states in a case challenging the US health care reform law. The lawsuit challenges Congress’ constitutional authority to impose an individual mandate and claims the law infringes on states' rights.
  • Mercer's analysis of the health care reform legislation projects that in the near term, employers will absorb an additional 4-6% increase above current health care cost trends. Furthermore, their analysis estimates that it is highly likely that the cost trend may increase at a higher rate than expected over the next 10 years.
  • Governmental guidance defining a "grandfathered plan" was released. If plans make changes, like significantly decreasing the benefits covered, materially increasing cost sharing to discourage covered individuals from seeking needed treatment, or substantially increasing the cost of coverage borne by participants, the plan will lose its grandfather status. The government estimates that between 39 percent and 66 percent of employer plans will probably lose their grandfathered status by 2013.
    • Any health plan seeking to maintain grandfather status must include a statement, in any plan materials provided to participants describing the benefits provided under the plan, that the plan believes it is a grandfathered plan within the meaning of PPACA.
    • If an employer offering a fully insured plan changes insurers, the affected benefit package loses grandfathered plan status.
    • For fixed-amount copayments, a plan will lose its grandfathered plan status if there is an increase since March 23, 2010, in the copayment that exceeds the greater of (A) the maximum percentage increase or (B) five dollars increased by medical inflation.
    • A plan loses its grandfather status if the employer or employee organization decreases its contribution rate to any tier of coverage for a class of similarly situated individuals by more than five percent below the contribution rate on March 23, 2010.
  • A plan that loses its grandfathered status becomes subject to a number of additional requirements including:
    • Non-discrimination requirements applicable to fully-insured plans,
    • Required coverage of preventive care and immunizations without cost sharing,
    • Required coverage of some expenses incurred in clinical trials in some circumstances,
    • A revamped appeals process, including external review,
    • Prohibition on requiring prior authorization or increased cost sharing for certain emergency services performed in connection with a legitimate emergency,
    • Prohibition on requiring authorization or referral for OB-GYN services, and
    • Requirement that enrollees be able to select a primary care provider, including in the case of children, a pediatrician, from any available primary care provider that is accepting new patients.
    • Annual out-of pocket maximums may not exceed the level established for Health Savings Accounts in connection with qualified high deductible health plans, and
    • Deductibles may not exceed $2,000 for individual coverage and $4,000 for family coverage.


The U.S. Department of Labor clarified the definition of "son and daughter" under the Family and Medical Leave Act to ensure that an employee who assumes the role of caring for a child receives parental rights to family leave regardless of the legal or biological relationship. An employee who intends to share in the parenting of a child with his or her same sex partner will be able to exercise the right to FMLA leave to bond with that child.

COBRA Subsidy

Under an amendment proposed last week to tax extension legislation, employees laid off from June 1 through Nov. 30, would be eligible for the 65% federal premium subsidy but for six months instead of the prior 15 months.

San Francisco Health Care Ordinance

The Obama administration took a public stance in favor of San Francisco's side in the legal dispute over the city's health coverage law. The government urged the Supreme Court to reject an appeal by restaurant owners who objected to paying part of the cost.

HSA & High Deductible Plan Limits

The limits for HSA will remain capped at $3,050 for individuals and $6,150 for families (with a $1,000 catch-up contribution) and HDHPs will continue to have a minimum deductible of $1,200 for individuals and $2,400 for families with a maximum out of pocket limit of $5,950 for individuals and $11,900 for families.


  • The 2010 version of the annual Commonwealth Fund comparison of the U.S. health system with those in other industrialized nations found the US the lowest in the rankings. The criteria comprised quality, access, efficiency, equity, whether people in each country lived long and productive lives, and how much each country spent per person on care.