Health Care Reform

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All news related to health care reform.

As a follow-up to our update from last week (April 18, 2012), we would like to call your attention to two more potential impending changes to your medical plan(s):

Mandatory Maternity Coverage for ALL Medical Insurance Plans in CA, Effective July 1, 2012 (to June 1, 2013) Renewals

Effective at renewal beginning with July 1, 2012 renewals, all medical insurance plans issued in California –whether issued in the Large Group, Small Group, or Individual & Family segments—will be required to cover “Maternity Services.” “Maternity Services” within the plan must contain all 6 of the following elements: (1) pre-natal care; (2) ambulatory care; (3) maternity services; (4) involuntary complications of pregnancy; (5) neonatal care; and, (6) in-hospital maternity care, including labor and delivery and post-partum care.

This “addition” (to plans that do not already cover said) is regardless of a plan’s grandfathered status.

No action required by the employer, but they may wish to inform their plan participants of this change (although, most group plans already cover maternity services in California, albeit the coverage may be “enhanced” post-7/1/2012).

Summary of Benefits Coverage/Uniform Glossary of Definitions (SBC/UGD) Beginning 9/23/2012

Beginning September 23, 2012 (practically-speaking, this means renewals beginning October 1, 2012), all medical insurance plans will be required to distribute –at the “appropriate times (see below) -- a ‘Summary of Benefits and Coverage’ (SBC) to each person enrolled on the plan. Here are the main elements that you should be aware of:

The SBC is essentially a 4-page (double-sided) “quick-reference chart” for the benefits offered under that particular Medical insurance plan. You can view a sample completed form here: http://cciio.cms.gov/resources/files/Files2/02102012/sample-completed-sbcfinal.pdf.pdf

Accompanying each distributed SBC is the Uniform Glossary of Definitions (UGD); this is four-page “dictionary-sheet” that describes “standard” medical insurance terms (and how they may –but do not necessarily!—relate to an enrollee’s medical insurance plan). This document –the content of which is unchangeable--is located here: http://cciio.cms.gov/resources/files/Files2/02102012/uniform-glossary-final.pdf

For fully-insured plans: the insurance carrier is responsible, by law/regulation, for actually completing the SBC and delivering it to the Plan Sponsor (i.e., you, as the employer). However, the plan sponsor can assume the completion responsibility, contractually with the carrier, if they so choose. Furthermore, it is the responsibility of both the carrier and the plan sponsor in actually distributing the SBC/UGD to the plan participants/dependents at the appropriate times.
- For self-funded plans, all responsibility for all facets rests with the Plan Administrator (i.e., employer).

“Appropriate times” to distribute the document defined:
- For a plan that has an open enrollment (OE) period (NOTE: this is the majority of employers): the document must be distributed during the first OE period post-9/23/2012 (and, at later years), but not later than 30 days before the actual renewal date. The document is required to be distributed to all participants on the plan(s).
  - § Example: ‘Employer X’ has one particular enrollee who has enrolled on their plan himself, his legal spouse, and his two dependent children. Strictly speaking, all 4 of these people are entitled to receive a separate SBC/UGD; however, the plan sponsor can meet its distribution obligation by mailing, via first-class mail, one single SBC/UGD (assuming all 4 in this hypo are on the same plan!)to the enrollee’s last known mailing address.
    - But note: this is not acceptable if it is known (or, the employer “should have known”) that at least one of the dependents on the plan has a different mailing address from the primary enrollee (this would, practically-speaking, most likely occur when one or more of the plan’s dependents are “overage dependents”).
    - Important note: Under the regulation, “given” = “postmarked/date mailed” (similar to IRC postmarking rules; i.e., date your taxes are submitted is based on postmark-date).

For plans that do NOT have open enrollment (i.e., plans that “automatically roll-over”): the document must be distributed to participants 30 days before renewal, effective first post-9/23/2012 renewal (and, annually thereafter).

For “special/HIPAA enrollees” enrolling post-9/23/2012, but before the plan’s renewal/OE that is after 10/1/2012 (i.e., mid-year entrants): the document must be distributed at the time of the plan’s OE/30 days before renewal.
- § Example: Plan renews 4/1. Employee ‘T’ enrolls on plan 11/1/2012, single coverage. ‘T’ does not have to receive a SBC/UGD until 3/1/2013 (assuming this group has 3/1/2013 OE).

For “special/HIPAA enrollees” who enroll after the plan’s first post-9/23/2012 renewal/OE: within 90 days of his/her enrollment.
- § Example: Plan renews 4/1. Employee ‘S’ enrolls on plan 6/1/2013, single coverage. ‘S’ must receive a SBC/UGD no later than 9/1/2013.

We will apprise you of further elements regarding the SBC (in particular, any additional steps that you may wish to take, in order to ensure compliance with the regulation) as we approach September of this year. In the interim, should you have questions regarding any of the above, please feel free to contact me at (805) 684-5100 x308 or via e-mail at This email address is being protected from spambots. You need JavaScript enabled to view it. .

Best Regards,

Michael J. Cramer, J.D.

Beneflex Insurance Services, Inc.

Compliance Officer

101 West Anapamu St., 3rd Floor

Santa Barbara, CA 93101

Office: 805-684-5100 ext. 308

As we approach the middle of the year, we wanted to make you aware of certain impending changes to your medical insurance plan(s):

Medical-Loss Ratio (MLR) Rebate Update

On or about August 1, 2012, health insurance carriers who have failed to meet the PPACA-required Medical-Loss Ratio for 2011 (85/15 for Large Group plans; 80/20 for Small Group and Individual/Family plans) will be mailing rebates to all employers who maintained medical insurance plans within those markets under that carrier.

The “final MLR data” from each of the carriers is due to be submitted to the Department of Health and Human services by June 1, 2012; shortly thereafter, we expect to know which markets (and, therefore, which specific employers) are due to receive a rebate. We will apprise you at that time which carrier-markets can expect a rebate in August.

While we are still gathering information regarding exactly how the notices and rebate will be disseminated by the carriers, it is our strong recommendation that, should your organization actually be eligible for (and thus, receive) a rebate, if possible, you apply it towards a future month’s premium amount, in lieu of taking the rebate as a “lump-sum payment.” This is to avoid triggering a “fiduciary duty liability” that may subject your organization to increased financial scrutiny under ERISA.

As previously stated, we will apprise you further of this matter in early-June of this year.

Mandated Coverage for Autism (California SB 946)

Effective their first renewal on or after July 1, 2012, all fully-insured plans (whether Grandfathered, or not) issued within the State of California must contain coverage for both medical and behavioral analysis treatment of autism. While many medical insurance plans that have been issued in California over the past decade have covered autism, many more have not; SB 946 ensures that, come June 1, 2013, all fully-insured plans within California will provide the aforementioned coverage for autism. You may wish to inform your enrollees of this change (so that they may, if necessary, avail themselves of it).

First-Dollar Coverage for Certain Preventive Health Services for Women

Effective their first renewal on or after August 1, 2012, all fully-insured, non-grandfathered plans issued nationwide (i.e., within California) must cover the following services at no-point-of-service-cost to the enrollee:

Well-woman visits;
Screening for gestational diabetes;
Human papillomavirus testing;
Counseling for sexually transmitted infections;
Counseling and screening for human immune-deficiency virus;
Contraceptive methods and counseling (NOTE: Religious employers as defined by 45 C.F.R. §147.130(a)(1)(iv)(B) may be exempt from providing this particular service; should this particular element be of interest/concern to you, please contact our office);
Breastfeeding support, supplies, and counseling;
Screening and counseling for interpersonal and domestic violence.

As with the addition of coverage for autism, you may wish to inform your enrollees of this added coverage change.

Should you have questions regarding any of the above, please feel free to contact me at (805) 684-5100 x308 or via e-mail at This email address is being protected from spambots. You need JavaScript enabled to view it. .

Best Regards,

Michael J. Cramer, J.D.

Beneflex Insurance Services, Inc.

Compliance Consultant

101 West Anapamu St., 3rd Floor

Santa Barbara, CA 93101

Office: 805-684-5100 ext. 308

UPDATE: On March 24, 2012, the long-awaited “omnibus” rules to implement much of the HITECH Act of 2009 finally arrived at White House Office of Management and Budget (OMB). The OMB's review of the omnibus functions as the final stage of the process of releasing/implementing this provision; by law, the OMB's review can last no longer than 90 days.

The practical effect of this new omnibus is that employers who are subject to the HITECH Act of 2009 [i.e., any employer who has access to Protected Health Information (PHI) and allows "business associates" access to said PHI] will almost certainly need to update their Business Associate Agreements --if not their entire HIPAA Privacy Policy-- in order to have these comply with the new requirements contained within the omnibus.

We will apprise you further as this matter unfolds...

REMINDER: Employers that issued 250 or more W-2 forms in 2011 will, for 2012, need to account for the aggregate cost of “health benefits” on their W-2 forms. You will enter this information in Box 12, Code ‘DD’.

The amount to be entered is the aggregate of the monthly premiums paid on behalf of the employee for his/her health insurance premiums. This amount should INCLUDE prescription drug, Medicare supplemental, and Employee Assistance Program (EAP) coverage, as well as coverage for on-site clinics. Note that the aggregate reported amount should exclude certain coverage, such as stand-alone dental & vision premiums, most HSA, FSA, and MSA contributions, and Long-Term Care coverage.

If your organization has not already done so, we strongly encourage you to contact a licensed CPA or tax attorney in your state. Of course, feel free to contact me at This email address is being protected from spambots. You need JavaScript enabled to view it. or 805-684-5100 x308 should you have questions regarding the matter that we may be able to assist with!

REMINDER: The last day to make a monetary contribution to your Health Savings Account (HSA) that counts for tax purposes towards your 2011 tax year is April 17, 2012

While the dollar limit on HSA contributions is determined on a monthly-basis, HSA contributions pertaining to one tax year may be made in one singular lump payment, so long as this payment is not made before the beginning of the said tax year, and no later than the original filing deadline for the individual's federal income tax return for said year (as stated, for the 2011 tax year, this date is 4/17/2012).