For Immediate Release: 05/21/2010
The information in this notice may change based on final rules and regulations from federal agencies, due later in 2010.
On March 23, 2010 President Obama signed the Patient Protection and Affordable Care Act (PPACA) into law. This law is expected to:
- Expand health care coverage to an estimated 32 million Americans through public programs, private health insurance plans, and employers.
- Remove barriers to health coverage.
- Address affordability issues.
What Are the Major Changes in the Law?
The law includes a multitude of changes for public programs, health plans, employers, and individuals, with varying effective dates. Some of the major provisions in the law that will affect PEBB members include:
- Implementing a mandate that all individuals must buy insurance coverage, or pay a penalty.
- Implementing a “shared responsibility” provision for employers to provide affordable health coverage to their full-time employees, or pay a penalty.
- Providing funding to help low-income individuals afford health coverage.
- Increasing dependent eligibility up to age 26 under a parent’s health coverage.
- Eliminating plan lifetime maximums, and restricting annual maximums on benefits.
- Requiring employers to report their health care costs on an employee’s W-2 statement.
- Limiting flexible spending account contributions to $2,500 per year.
- Increasing the Medicare payroll tax and creating a new Medicare tax on net investment income for individuals and couples earning more than $200,000 and $250,000 per year, respectively.
- Reducing and gradually eliminating the Medicare Part D “doughnut” hole (when the enrollee has to pay for all drug costs up to the plan’s out-of-pocket limit, after a Medicare Part D plan pays a certain amount).
Provisions scheduled for implementation on January 1, 2011 include:
- Dependent children can be covered on the subscriber’s account up to age 26.
- No lifetime dollar limits (PEBB medical plans don’t have lifetime dollar limits).
- No annual dollar limits on essential benefits.
- Employers must report their care costs on an employee’s W-2 statement.
- Employees enrolled in a flexible spending account will not be able to seek reimbursement for over-the-counter drugs (FSA enrollees may currently do this).
- Health plans must spend a certain percentage on medical claims versus administrative costs.
When Can I Start Covering My Dependent Child up to Age 26?
Beginning January 1, 2011, PEBB health plans expect to cover dependent children up to age 26. The reform bill does not require PEBB or any health plan to cover the child of a child who is receiving dependent coverage.
The federal Department of Health & Human Services will adopt rules that will further define eligibility and coverage for dependent children up to age 26. We expect those rules to be adopted before the end of 2010. Then PEBB will communicate how dependent coverage up to age 26 will be offered and what the premiums will be.
Why is PEBB Waiting until the Mandated Date of January 1, 2011 to Cover Dependent Children up to Age 26?
While several health plans have agreed to cover a subscriber’s children up to age 26 before the law requires it, PEBB decided not to implement early. We made this decision knowing that we must do several things before implementation, such as:
- Communicate the new eligibility to members.
- Modify our dependent forms, letters, online communications, etc.
- Modify the PEBB’s computer system.
- Modify our dependent processes, and train staff.
- Amend our rules.
It is more efficient and cost-effective to include these changes at open enrollment, when we normally communicate other PEBB plan and eligibility changes. The decision to wait to implement this effective January 1, 2011 will not jeopardize dependent coverage for our members up to age 26, since these dependents currently have access to coverage through state-mandated adult dependent coverage up to age 25 or COBRA.
Starting January 1, 2011, PEBB will cover dependent children up to age 26. PEBB will comply with the federal mandate in the same way we currently administer dependent coverage for children.
In addition, dependent children who lose eligibility for PEBB coverage in 2010 can continue their PEBB benefits with no break in coverage by following these steps:
If the child is under age 25 when coverage ends in 2010:
- Enroll him or her in adult dependent coverage.
- If the child then turns 25 during 2010, enroll him or her in COBRA.
- Effective January 1, 2011, enroll him or her in dependent child coverage up to age 26.
- When the child turns age 26, enroll him or her in COBRA coverage for up to an additional 36 months of coverage.
When Will I Hear More Information About How National Health Care Reform Will Affect My PEBB Coverage?
Now that the legislation has passed, the federal Department of Health & Human Services will adopt rules that will further define how employers and health plans will implement the changes. We expect those rules to be adopted before the end of 2010.
As soon as these rules are final and our staff and actuaries can review them, we will coordinate with our health plans to implement the changes and communicate them to our members. This may not happen during the annual open enrollment (scheduled for November 1 – 30, 2010), but we will communicate with affected members as soon as we can. Some changes will be effective January 1, 2011, and some will be phased-in over several years.
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