Does Health Care Reform Have You Puzzled?
You’ve heard a lot about the new federal health law, the Patient Protection and Affordable Care Act (“PPACA”) but what does it mean when it comes to your Rx benefit? There are many things that have happened and that are happening that will impact the drug portion of an employer-sponsored health plan whether it is fully insured, fixed rate insured, or self funded.
Grandfather Status - Any plan that existed on March 23, 2010 is considered a grandfathered plan. Many of the PPACA’s provisions will not apply to grandfathered plans until 2014, unless the plan loses that status before then. However, many items in the new law must be adopted before 2014 even if you are grandfathered. You will be required to notify your employees in the summary plan design (SPD) whether your plan is or is not grandfathered every year. Because grandfathered status can be lost by actions not under Benecard’s control (e.g., there are limits on how much you can change your employee contribution level), Benecard can not make this determination for you.
Dependent Age Extension- The PPACA requires all plans to allow dependent children of the employee to be covered until the end of the month in which the dependent attains the age of 26. Starting with the next open enrollment there can be no other eligibility requirements, e.g., no dependent status, no unmarried status, no “living with” or “student” status. The employer can place the responsibility on the employee-parent to communicate to the child the child’s right to sign up for coverage under the employee-parent’s benefit. If a plan is self funded, the dependent claim costs will be charged to the employer. If the program is insured, insurers may raise the program’s premium.
Appeals- Fully insured employers must follow the rules on health claim appeals in the state where the business is located. These rules usually include an independent review by a neutral outside body. The PPACA now requires all plans to have external review processes in place by July 1, 2011. Benecard has contracts in place with External Review Vendors. More reviews conducted by outside vendors equals more administrative expenses that may be passed on to the client.
Annual and Lifetime Limits- PPACA eliminated all lifetime limits. In addition, it will require a change in any annual limits your plan may have. A combined medical/Rx annual limit can be no lower than $1.25 million in 2011, $2 million in 2012, and is to be completely eliminated by 2014. The United States of Health and Human Services (HHS) has still not clarified whether an annual limit is directed at drugs only (e.g., some employers have a $5,000 annual limit on drugs only). If your plan limits are below the thresholds mentioned above, claims costs may go up.
OTC Prescriptions- Some plans allow the member to get an over-the-counter (OTC) drug as a substitute for a prescription drug at the expense of the plan. The PPACA and the IRS now have a rule that an OTC drug is NOT a qualified expense for an HSA/FSA, nor may the employer deduct the expense as a health-plan deduction unless the member has a prescription for the OTC drug. Benecard has a process to detect if an OTC prescription falls within the protocols of a pharmacy claim. However, HSA/FSA vendors using debit cards do not have a tracking process in place. If a member’s HSA/FSA activity is audited by the IRS, they better have a script for the purchased OTC drug or they could get penalized.
Mental Health Parity- This isn’t part of the PPACA, but it still has an effective date that coincides with the employer program’s next open enrollment. Your program must treat its mental health and substance abuse benefits the same as it treats the medical benefits regarding co-pays, deductibles, etc. Benecard is prepared to identify for you any drug plan component that might violate parity. For example, if the plan has a higher co-pay for mental health drugs or it excludes a drug-abuse-therapy drug (e.g., methadone), the plan will have to change.
These changes are complex and still evolving. They will have even greater impact on the medical portion of your health plan. Drug plan changes should match the medical plan changes. Please feel free to contact your Benecard Client Relations Manager for assistance on adhering to these new legal requirements.
Last updated 09/22/2015