Information Disclaimer Note: Congressional developments regarding health care reform are fluid and SIIA lobbyists are continually meeting with Members of Congress, key staff members and other industry stakeholders, which generate ongoing intelligence. In order to keep our members informed in "real time", we will report relevant information as we become aware of it. Given that the political process is inherently unpredictable, information communicated in previous reports may be superseded in subsequent reports. Should you have any questions in between reports, please contact SIIA's Washington, DC office directly at 202/463-8161.

December 24, 2009 --The United States Senate today passed its healthcare reform legislation on a straight party-line vote of 60 to 39, setting up a showdown with the House of Representatives next month to produce a final bill for signature by President Obama.

Provided below is an outline of provisions of the Senate bill that affect self-insured group health plans. Please click here for the more detailed SIIA analysis. The full text of the legislation can be accessed by clicking here. We are currently completing our analysis on how the Senate bill may affect workers' compensation self-insurers and captive insurance companies and expect to publish our findings shortly.

While SIIA maintains its opposition to certain aspects of the legislation, our lobbying efforts have secured four specific changes to protect the self-insurance industry as follows:

  • TPA Assessment
    The TPA Assessment has been stripped from the final legislation.
  • Self-Insurance Prohibition
    The self-insurance prohibition for groups under 250 lives, originally included in the Senate HELP Committee bill, has been stripped from the final legislation.
  • Rating Rules Not Applicable to Self-Insured Plans
    The Senate bill does not apply the new insurance market rating rules to self-insured plans. Under the bill, premium rates charged by health insurers (not self-insured plans) may vary only by family structure, community rating area, age (with a maximum of 3:1), and tobacco use (maximum of 1.5:1). Also, unlike fully-insured group health plans, self-insured plans may provide different coverage to full and part-time employees.
  • Self-Insurance Exclusion for "Qualified Coverage"
    Self-insured plans were excluded from the mandated minimum requirements imposed on health insurers in the Exchange, including, ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance abuse services, prescription drugs, rehabilitative services and devices, laboratory services, preventive and wellness services, and pediatric services. Although the vast majority of our plans already cover these areas, the exclusion limits the ability of the Secretary of HHS to open self-insured plans to burdensome mandates in the future, thus keeping intact our plans' flexibility.

Concerns with the Merged Senate Bill:

  • Employee Voucher Eligibility
    Employees with access to an employer-sponsored plan, under certain income eligibility, to receive a voucher from their employer, equal to their employer's contribution ("free choice" voucher), to purchase coverage through an Exchange participating plan. To be eligible for a voucher, and an employee would have to meet both the of following criteria:
    • The cost of the employer's contribution needs to be between 8% and 9.8 percent of the employee's household income
    • Employee has a household income below 400% FP
    If the employee chooses coverage that costs less than the voucher, the employee keeps the remainder amount and vouchers cannot be taxed as income.
  • Appeals Process Implementation
    Requires that all beneficiaries have access to, and are made aware of, a process of appeals for any denial of coverage or a dispute of claims cost-sharing. Also requires plans to implement a process for appeals of coverage determinations and claims. Secretary of HHS is authorized to review established appeals process.
  • Low-Income Tax Credits
    The PPACA provides for government subsidies to be made eligible to low-income workers for use in purchasing health coverage in an Exchange participating plan. Subsidies are not allowed to be used for purchase of employer-sponsored coverage.
  • Employer Mandate
    Requires employers to take a "shared responsibility" in ensuring that their employees have access to "affordable" healthcare coverage. The Act sets payment requirements for plans that meet minimum standards and details penalty fees formularies for employers who do not offer coverage.
    • Employers with more than 50 full-time (over 30 hours) employees, that do not offer coverage and who has at least one full-time employee receiving a "premium assistance" tax credit, are required to pay $750 per full-time employee - adjusted annually and non-deductible.
    • Requires an employer with more than 50 full-time employees that offers coverage, but has employees receiving the "premium assistance" tax credit, to pay the lesser of $3,000 for each employee receiving the credit, or $750 for each full-time employee - adjusted annually and non-deductible.
    • An employer with more than 50 full-time employees that maintain an enrollment waiting period would be required to pay:
      • $400 for any full-time employee in a 30-60 day waiting period - adjusted annually and non-deductible.
      • $600 for any full-time employee in a 60-90 day waiting period - adjusted annually and non-deductible.
  • Disclosure Coverage options
    Plans will be required to disclose to eligible employees all of their health coverage options. Employers are required to provide notice to their employees informing them of the existence of an Exchange and if the employer plan's share of the total allowed costs of benefits provided under the plan is less than 60% of such costs, so that the employee may be eligible for a premium assistance tax credit and cost-sharing reduction.
  • Reporting Requirements for Employer-Plan Sponsors
    In order to certify compliance with "minimum standard" requirements, employer-sponsored plans will be required to submit certain information. Employer-sponsors are also responsible for submitting to the IRS whether or not and for how long, each of their employees possessed minimum essential coverage. Large employers (over 200 employees) will be required to report the following:
    • Whether it offers to its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan
    • The length of any applicable waiting period
    • The lowest cost option in each of the enrollment categories under the plan
    • The employer's share of the total allowed costs of benefits provided under the plan
    • The number and names of full-time employees receiving coverage
    • A disclosure of the value of the benefit provided by the employer for each employee's health insurance coverage on the employee's annual Form W-2

Insurance Market Reforms:

  • No lifetime or annual limits
  • Prohibition on rescissions
  • Coverage of preventive health services
  • Dependent coverage available to dependents under age 26 and unmarried
  • Prohibition of discrimination based on salary
  • Minimum loss ratio
  • Guaranteed renewability of coverage
  • Prohibition of preexisting conditions, discrimination based on health status, and on waiting periods