With some of the earliest health care reform effective dates come and gone, and looking ahead to the end of the year, now is a good time to check in on health care reform’s regulatory landscape. The health care reform law left a lot of gaps to be filled by regulatory guidance. Let’s take a minute and look at some of the holes that are still out there.
Nondiscrimination rules for fully-insured plans
This is at the top of my list for guidance I’d like to see. And it’s apparently forthcoming. Back in September, the IRS issued a request for comments on the health care reform rule that new fully-insured plans can’t discriminate in favor of highly-compensated employees. Comments are due on Nov. 4 and the IRS will need some time to respond, but I’m hoping they can turn this around pretty quickly.
I’d also like to see the IRS include some comprehensive explanation of the tests that make up the nondiscrimination analysis. The existing Code section 105(h) rules are pretty complex and that’s a hurdle for those in the industry who have never had to deal with them before. Rest assured that we’ll be devouring any information as soon as it comes out and getting our analysis out in Broker Briefcase as soon as possible.
Changes to grandfathered plan rules
The DOL has been busy in the last few weeks issuing “Implementation FAQs” on various issues related to health care reform. In one of these FAQs, the DOL has been busy in the last few weeks issuing “Implementation FAQs” on various issues related to health care reform. In one of these FAQs, the DOL indicated that the Departments in charge of health care reform would soon be addressing the circumstances under which grandfathered group health plans may change insurance carriers without giving up their grandfathered status.
We’ve felt all along that prohibiting grandfathered plans from changing carriers was needlessly restrictive. Under that rule, an employer could keep all terms of the plan the same (or even improve them for participants) and still lose grandfathered plan status just because a different carrier was paying the benefits. That didn’t seem fair and it looks like the Departments are backing off on their restrictive approach. As of this writing, no word yet on what the circumstances actually are, but we’re keeping a close eye on this as well.
Medical loss ratios
This hole has been partly plugged, but nothing is yet set in stone. On Oct. 27, the NAIC sent its model MLR regulation to HHS. HHS still has to approve and finalize it, but they have stated they plan to give a lot of deference to the recommendation. Unfortunately, as of right now, agent/broker commissions are being lumped in with administrative expenses. However, there is a bit of a silver lining. NAIC has formed a working group to coordinate with HHS on how to preserve the “vital role of agents and brokers,” so the door isn’t closed on how this issue will be handled.
Check out Broker Briefcase on Nov. 1 for a short Legislative Brief on the medical loss ratio issue and continue to stay tuned for more information as it becomes available.