FAQs on Exchanges, Market Reforms and Medicaid

Health Care Reform Legislative BriefThe Affordable Care Act (ACA), which was enacted on March 23, 2010, includes significant changes related to health care coverage. Among other things, the ACA calls for the creation of state-based Affordable Health Insurance (Exchanges) to facilitate the purchase of insurance, requires insurers to comply with a new set of market reforms and expands the Medicaid program.

On Dec. 10, 2012, the Department of Health and Human Services (HHS) Centers for Medicare & Medicaid Services (CMS) issued Frequently Asked Questions (FAQs) to answer questions regarding the implementation of the Exchanges and the Medicaid expansion.

Medicaid Expansion

The ACA calls for a nationwide expansion of Medicaid eligibility, set to begin in 2014. Under the expansion, nearly all adults under 65 with family incomes of up to 133 percent of the federal poverty level (FPL) would qualify for Medicaid.

Originally, the ACA required states to comply with the new Medicaid eligibility requirements, or risk losing their federal funding. The Supreme Court’s ruling in the ACA case, however, limited the federal government’s ability to penalize states that don’t comply, effectively making the expansion optional. Even if they choose not to expand their Medicaid program, states will continue to receive their standard federal contributions for individuals who were already eligible for Medicaid coverage in their state.

States are not under a deadline for deciding to expand Medicaid and can drop out of the expansion program later if they participate initially.

Federal Matching Funds

For states that implement the Medicaid expansion, the federal government will cover 100 percent of the cost of the first three years of the expansion (2014-2016), gradually phasing down to a 90 percent share. The FAQs clarify that states must fully expand Medicaid eligibility up to 133 percent of the FPL to receive the 100 percent federal matching funds. This means that states that implement partial Medicaid expansions (that is, expansions to less than 133 percent of the FPL) will not receive the full federal funding.

The FAQs note that states do have the option of implementing a partial Medicaid expansion. However, any partial expansion would be subject to the regular federal matching rate (that is, the federal match that states received before the expansion). Additionally, HHS intends to allow states significant discretion as to the “benchmark” benefit plans they will offer the Medicaid expansion population, as long as they cover the 10 categories of essential health benefits. States will also have some control over the cost sharing they will impose, particularly for recipients with incomes above 100 percent of the FPL.

Effect of the Supreme Court Ruling

The FAQs further clarify that the Supreme Court ruling releases the states only from the Medicaid expansion requirement. States must still coordinate Medicaid eligibility with the exchanges if they wish to stay in the Medicaid program. They must also convert their income eligibility standards for most groups to the modified adjusted gross income (MAGI) standard used for premium tax credit eligibility.

Health Insurance Exchanges

The ACA also requires each state to have an Exchange to provide a competitive marketplace where individuals and small businesses will be able to purchase private health insurance coverage. The Exchanges are scheduled to be operational by Jan. 1, 2014, with enrollment expected to begin on Oct. 1, 2013.

States have three options with respect to their Exchanges. A state may:

  • Establish its own state-based Exchange;
  • Have HHS operate a federally facilitated Exchange (FFE) for its residents; or
  • Partner with HHS so that some FFE Exchange functions can be performed by the state.

State-based and State Partnership Exchanges

States that intend to pursue a state-based Exchange or a state partnership Exchange must submit a short declaration letter and an Exchange blueprint to HHS for approval. In November 2012, HHS extended the deadline for states to submit this notification and blueprint to:

  • Dec. 14, 2012, for states that intend to establish their own Exchange; or
  • Feb. 15, 2013, for states that would like to partner with HHS to establish an Exchange.

The FAQs clarify that HHS will not further extend the deadline beyond the current date. Additionally, the FAQs outline federal funding that is available to states that establish a state-based or state partnership exchange, and describe a federal data hub that states will be permitted to use, free of charge for exchange, Medicaid and Children’s Health Insurance Program (CHIP) activity.

Federally Facilitated Exchanges

HHS will operate federally facilitated Exchanges in each state that does not move forward with implementing its own Exchange or select the partnership model. The FAQs state that HHS intends to work with these states to preserve the traditional responsibilities of state insurance departments when establishing FFEs. HHS plans to coordinate with the states to take advantage of regulatory efficiencies, such as relying on states with effective rate review programs for rate review of qualified health plans.

The FAQs also reiterate that the FFEs will be funded through monthly user fees. Although HHS previously proposed that the rate for these fees will be 3.5 percent of the premium, the FAQs note that this rate may be adjusted to take into account state-based Exchange rates.

Other Topics

The FAQs address a number of other topics that states have expressed concern about, including, but not limited to:

  • Bridge Plans – The FAQs endorse a “Medicaid bridge plan” that states could use to ease the transition for consumers out of Medicaid or CHIP coverage. A bridge plan would be certified as a Medicaid managed care plan, but could continue to offer coverage through a single insurer and provider network to households transitioning out of Medicaid, or that have children in Medicaid or CHIP and adults in the Exchange.
  • The Navigator Program – The FAQs also describe in greater detail how the navigator program will work. Navigators are organizations, or in some instances individuals, that will receive grants from the Exchanges to educate and assist consumers to better understand their insurance options.

The Noble Group will continue to monitor health care reform developments and will provide updated information as it becomes available.

© 2012 Zywave, Inc. All rights reserved. (BK 12/12)

Proposed Reinsurance Fees Will Cost Group Health Plans

benefits buzz1

On Dec. 7, the Department of Health and Human Services (HHS) issued proposed regulations on some of the fees that will affect insurers and health plans. The regulations on transitioned reinsurance fees provide:

  • For self-insured group health plans, the plan sponsor is liable for paying the reinsurance fees, although a TPA or ASO contractor may be used to make the payment
  • The amount of the fee is proposed to be $63 per covered life per year
  • The rate will be announced each year by HHS



© 2012 Zywave, Inc. All rights reserved

Health Care Reform: Proposed Rules on Workplace Wellness Programs

benefits buzz 2The Affordable Care Act (ACA) includes provisions to encourage appropriately designed, consumer-protective wellness programs in group health coverage.

On Nov. 26, proposed regulations were released regarding the ACA’s nondiscrimination requirements for wellness programs.

The proposed regulations would increase the maximum reward under a health-contingent wellness program from 20 percent to 30 percent of the cost of coverage, and would further increase the maximum reward to 50 percent for wellness programs designed to prevent or reduce tobacco use.

Health-contingent wellness programs require individuals to satisfy a standard related to a health factor in order to obtain a reward. This includes wellness programs that require an individual to attain or maintain a certain health outcome in order to obtain a reward (such as not smoking, attaining certain results on biometric screenings or meeting exercise targets). This type of wellness program must meet the following five nondiscrimination standards:

  • Frequency of opportunity to qualify
  • Size of reward
  • Uniform availability and reasonable alternative
  • Reasonable design
  • Notice of other means of qualifying for the reward

These regulations would apply to both grandfathered and non-grandfathered group health plans and group health insurance coverage for plan years beginning on or after Jan. 1, 2014.

Definitive guidance will not be available until the regulations are in final form. Comments on the proposed regulations are due by Jan. 25, 2013.

© 2012 Zywave, Inc. All rights reserved

Did you know?

benefits buzz 2While insured small group plans and individual health insurance policies will be subject to new deductible and out-of-pocket limit caps in 2014, proposed legislation indicates that the government does not intend to impose these regulations on self-insured group health plans or insured large group health plans. In addition, remaining grandfathered group health plans will also be exempt from these new requirements.


© 2012 Zywave, Inc. All rights reserved

Interim Final Rules on Patients Bill of Rights – Lifetime and Annual Limits

Health Care Reform Legislative BriefAmong other reforms, the Affordable Care Act (ACA) contains prohibitions for health plans regarding lifetime and annual limits on the dollar value of health benefits. This mandate is effective for plan years beginning on or after Sept. 23, 2010. Although annual limits are generally prohibited, “restricted annual limits” are permitted for essential health benefits for plan years beginning before Jan. 1, 2014.

On June 28, 2010, the Departments of Health and Human Services (HHS), Labor and the Treasury issued interim final rules regarding these health plan coverage mandates.

Click  Lifetime and Annual Limits for the full legistlative brief.

© 2012 Zywave, Inc. All rights reserved. BK 9/12

HHS Provides Guidance on Methods for De-identifying PHI

Legislative BriefOn Nov. 26, 2012, the Department of Health and Human Services (HHS) released technical guidance and a related webpage regarding methods for de-identification of protected health information (PHI) in accordance with the HIPAA Privacy Rule. HHS identified the Expert Determination Method and Safe Harbor Method as the two available methods for satisfying the Privacy Rule’s de-identification standard.

HHS’ guidance explains both de-identification methods and provides information in a question and answer (Q&A) format to help covered entities, such as health plans, understand the available options for performing de-identification.  To read more, click HHS Provides Guidance.


Design © 2012 Zywave, Inc. All rights reserved.

PPACA changing the face of dental?

Dental coverage modifications likely, if unintended, consequence of health care reform.

toothbrush with capital

The Patient Protection and Affordable Care Act will impact dental insurance in numerous ways — many unintended, say those in the industry, leading to both positive and negative effects in the short and long term.

“When the Affordable Care Act was written the main focus was on medical, and dental was sprinkled throughout — sometimes purposely and sometimes without thinking about the ramifications on the dental industry,” says Joanne Fontana, a consulting actuary at Milliman in Windsor, Conn. “Dental, more so than medical, has to deal with a lot of
changes coming up.”

Those changes will include mandatory pediatric oral care for all medical insurance offered
through the exchanges and small group and individual markets — as mandated by the
Essential Health Benefits rule of PPACA — which, while “a great thing for children’s oral care, kind of turns the way dental insurance has been offered on its head,” Fontana says.
“Historically, most people purchase [dental insurance] through their employers.

To read more, click here.


Kalish, B. (2012, December). PPACA changing the face of dental? Employee Benefit Adviser. p 34-35.

Health Coverage Shrinks for Early Retirees

benefits buzz 2

The economy’s slow growth and rising health care costs have employers thinking twice about offering health care coverage to early retirees. Over the past decade, fewer and fewer private-sector businesses have chosen to continue offering health coverage to early and Medicare-eligible retirees. Key findings from the Employee Benefit Research Institute’s survey on the state of retiree health benefits include:

  • Of the few companies that still offer retiree health benefits, 43 percent of surveyed employers say that they are very likely to increase retirees’ portion of premiums in 2013. 21 percent say they are somewhat likely to increase it.
  • In addition, 21 percent of surveyed employers said that they are very likely to increase cost sharing in 2013, and 32 percent say they are somewhat likely to increase it.



© 2012 Zywave, Inc. All rights reserved

Tips for a Smooth Open Enrollment Season

Benefits Buzz November 2012

Much too often, employees are unaware of the changes in benefits offerings from year to year and, by default, select the same plan they chose the year before, even if it is no longer the best option for them.

This year during open enrollment, make sure your employees have the information they need to make the best possible benefits election choices and avoid wasting money in the long run.

Here are some tips to ensure that open enrollment goes smoothly, and your employees are happy with their benefits elections:

  • Hold an open enrollment meeting where the options are explained as simply as possible, and employees can ask questions.
  • Offer a summary of benefits and coverage (SBC) to employees before they make their decisions.
  • Develop an employee communication strategy for open enrollment. This should include: publicizing deadlines far in advance, regular reminders and offering at least seven communications in at least three different format.
  • Offer benefits-related communications after implementation of the new plan explaining how to best use it.
  • Be accessible for employees who have questions about open enrollment.

Take an active role in ensuring that your employees get the care they need. Put these steps into action within your organization.

Your broker can provide you with tools to ensure that open enrollment is a success. Give The Noble Group a call today. (800-372-5834 Ext 5)

© 2012 Zywave, Inc. All rights reserved

Did You Know?

benefits buzz1

Over the past few months, there have been fewer health care reform regulations and rules being released. This isn’t uncommon immediately before a presidential election, as candidates attempt to avoid controversies.

Since the election is now over and President Barack Obama will be returning to the White House for his second term, expect a quick return to the frequent passing of regulations and rules, specifically relating to the governing of health insurance exchanges, the individual mandate and employee classification.


© 2012 Zywave, Inc. All rights reserved