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Financial Executives International. Current Regulatory Developments and Product Trends in Healthcare (HSA’s and Other Timely Topics). Patricia Huffman Rod Turner Vice President, Actuarial Vice President, Product Policy Wellmark Blue Cross Blue Shield of Iowa America’s Health Insurance Plans.

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financial executives international

Financial Executives International

Current Regulatory Developments andProduct Trends in Healthcare(HSA’s and Other Timely Topics)

Patricia Huffman Rod Turner

Vice President, Actuarial Vice President, Product Policy

Wellmark Blue Cross Blue Shield of IowaAmerica’s Health Insurance Plans

February 17, 2005

  • Health Savings Accounts
  • Projected Federal Issues and Trends in 2005
  • HIPIowa
eligibility for health savings accounts
Eligibility for Health Savings Accounts
  • Must be covered by a qualified high deductible health plan
  • Must not be covered by a low or no-deductible health plan
  • Cannot be claimed as a dependent on somebody else’s tax return
high deductible health plan hdhp
High Deductible Health Plan (HDHP)
  • Comprehensive health plan with an annual deductible of at least:
    • $1,000 for single coverage
    • $2,000 for family coverage
  • Annual out-of-pocket maximums (OPM) of no more than:
    • $5,100 single
    • $10,200 family
  • Only preventive health services may be exempted from the deductible (these benefits may have “first-dollar” coverage)
high deductible health plan hdhp cont
High Deductible Health Plan (HDHP) (cont.)
  • In the case of a network plan (PPO, HMO, Exclusive Provider Organizations), the OPM limit applies only to in-network services
  • Deductible and OPM limits are indexed and subject to change annually
  • After 2005, prescription drugs must be subject to the minimum annual deductible (thus precluding most drug-card plans)
contribution rules
Contribution Rules
  • Maximum annual contribution by an individual to their HSA is the lesser of 100% of the deductible (e.g., $1,000) or an indexed amount established by law.
    • For 2005, the limit is $2,650 for single coverage and $5,250 for family coverage
  • Contributions are permitted only for the months that the individual has qualifying high-deductible health plan coverage
distribution of money from the hsa
Distribution of Money from the HSA
  • Distributions from an HSA are tax-free if used to pay for “qualified medical expenses” of the account beneficiary, the spouse or dependents:
    • Expenses as defined by Code Section 213(d) – similar to flexible spending account
    • COBRA coverage
    • Health insurance while unemployed
    • Qualified long term care insurance
    • Retirement health benefits except Medigap
non medical distributions
Non-Medical Distributions
  • Income Taxes
    • Amounts distributed from an HSA that are not for qualified medical expenses are subject to income tax
  • Excise Taxes
    • Non-medical distributions are also subject to an additional 10% excise tax
    • Does not apply to distributions made after beneficiary’s
      • Death
      • Disability
      • Attainment of age 65
potential legislation for 2005
Medical liability reform

Class action reform

Patient safety



Health Care CHOICE

Association health plans

Genetic nondiscrimination

Long-term care

Mental health parity

Recreational parity


Potential Legislation for 2005
medical liability reform
Medical Liability Reform
  • Places caps on non-economic and punitive damages
  • Applies to health plans and providers
  • Approved by House in March 2003

(229-196 vote)

  • Outlook less favorable in Senate
    • Supporters of medical liability reform lost procedural votes in July 2003 (49-48 vote) and February 2004 (48-45) – needed 60 votes to win
class action reform
Class Action Reform
  • Allows large, multi-state class action suits to be adjudicated in federal court
  • Approved by House in June 2003 (253-170 vote)
  • Approved by Senate Judiciary Committee in April 2003 (12-7 vote)
  • Cloture motion defeated in Senate in October 2003 (59-39 vote, needed 60 votes to win)
patient safety
Patient Safety
  • Establishes legal protections for medical error information voluntarily reported by providers
  • Approved by House in March 2003 (418-6 vote)
  • Approved by Senate HELP Committee in July 2003 (20-0 vote)

House Republican Medicaid Task Force

  • Led by Rep. Heather Wilson (R-NM)
  • Concerned about Medicaid’s impact on state budgets
  • Flexibility for states is high priority
  • Energy and Commerce Committee Chairman, Rep. Barton has placed a priority on Medicaid reform in 109th Congress

Senate Republican Task Force

  • Recommendations released in Spring 2004
  • Senator Gregg (R-NH) says solutions should:
    • Target assistance to those with the greatest need
    • Empower health care consumers
    • Focus on care, not just coverage
    • Encourage choice, competition, and quality
    • Address health care costs to improve access
association health plans
Association Health Plans
  • Allows small employers to form regional and national AHPs that would be exempt from state benefit mandates and other state regulatory requirements
  • Approved by House in June 2003 (262-162 vote)
  • Faces opposition in Senate
genetic nondiscrimination
Genetic Nondiscrimination
  • Prohibits discrimination based on genetic information
  • Approved by Senate in October 2003 (95-0 vote)
  • Does not include sweeping private right of action originally proposed by Senator Kennedy
  • Does not prohibit health plans from using/disclosing genetic information for health care operations
long term care
Long-Term Care
  • Makes long-term care insurance more affordable by:
    • Establishing a tax deduction for individuals who purchase long-term care insurance
    • Providing a $3,000 tax credit to caregivers
    • Allowing long-term care insurance to be offered under employer-sponsored cafeteria plans and flexible spending arrangements
  • Introduced in House by Johnson (R-CT)/Pomeroy (D-ND)
  • Introduced in Senate by Grassley (R-IA)/Graham (D-FL)
mental health parity
Mental Health Parity
  • Expands 1996 law by requiring parity for all treatment limitations and all financial requirements for all conditions listed in the DSM-IV, except for substance abuse disorders
  • 67 cosponsors Senate (Domenici-Kennedy)

242 sponsors in House (Kennedy-Ramstad)

  • Domenici compromise – not based on DSM-IV
  • Opposition from House leadership
recreational parity
Recreational Parity
  • Prohibits health plans and insurers from denying otherwise available benefits for injuries resulting from legal transportation and recreational activities
  • Approved by Senate HELP Committee in October 2003
  • Introduced in House by Rep. Scott McInnis (R-CO) – 167 cosponsors
choice act
  • Allows consumers to purchase health insurance across state lines
  • Similar proposal included in President’s budget
  • Likely to be issue for 109th Congress
smart act
  • Market Conduct Uniformity & Coordination
  • One Stop & Uniform Licensing of Agents
  • Streamlined Merger Oversight
  • Life and Health Insurance Interstate Compact for Filing of Policies
  • Single Point of Filing of P&C and Reinsurance Policies and Rates
  • Uniform Internal and External Review
  • Partnership Advisory Body to Congress
  • Removal of Rate Authority of All Lines
background of state individual programs
Background of State Individual Programs
  • State of Iowa has two separate health insurance programs available to individuals not eligible for affordable insurance coverage.
    • Iowa Comprehensive Health Association (ICHA) (also known as the “high risk pool”)
    • Basic and Standard (B&S Plans)
  • The number of individuals with ICHA coverage has been reduced to under 200 due in large part to B&S Plans, which are generally less expensive than ICHA Plans.
  • For calendar year 2003, there were 9,365 individuals covered by B&S Plans.
background of state individual programs cont
Background of State Individual Programs(cont.)
  • Under Iowa Code Chapter 513C, carriers offering B&S Plans are reimbursed for their losses on these plans.
    • The mechanism for funding such losses is the Iowa Individual Health Benefit Reinsurance Association (IIHBRA).
      • Members of IIHBRA are all carriers, organized delivery systems, and public self-funded health plans.
      • Members are assessed on an annual basis for losses.
    • The past 5 years, the assessable losses have ranged between $15.2 million to $18.7 million.
    • For the past 5 years, public self funded entities have been responsible for $2 to $3 million of each assessment.
house file 647
House File 647
  • The Iowa Insurance Division was directed to establish an Individual Health Insurance Task Force
    • To conduct a study to review individual health insurance market reform under Iowa Code Chapter 513C and the ICHA under Iowa Code Chapter 514E
    • The Insurance Commissioner was to select the members of the Task Force that included representatives from the ICHA, a public employee governing body subject to Iowa Code Chapter 509A, and other health insurance-related parties or experts as deemed appropriate by the Commissioner.
overview of proceedings and deliberations
Overview of Proceedings and Deliberations
  • The review was divided among the following categories:
    • Programs’ Eligibility
    • Programs’ Benefit Designs
    • Programs’ Rate Structures
    • Administration of the Programs
    • Funding of Assessments
overview of proceedings and deliberations cont
Overview of Proceedings and Deliberations (cont.)
  • The Task Force concluded that the ICHA and B&S programs should offer similar products. Assuming similar products are offered, the two programs would be redundant and only one program should be necessary in the future.
  • The Task Force recommended that legislation be passed that would result in abolishing the requirement imposed on carriers to offer B&S Plans.
  • Carriers would continue to maintain the existing B&S Plans until the individuals with these plans no longer desired to keep their coverage under such plans.
  • Executive Director
  • Administrator
    • Benefit Management, Inc. (BMI)
  • Commission
    • $200 finders fee
  • Premiums
    • 150% of post 1996 rate of top five carriers
    • Rates vary by gender and tobacco use
    • Single only
  • General Eligibility Requirements
    • You are a resident of the State of Iowa
    • You must also meet one of the Eligibility Categories
      • Medical Eligibility
      • Medical Condition
      • Federal Eligibility
      • Basic and Standard Eligibility