Consumer Driven Market Report Capitol Hill Update
Supreme Court Ruling Hits In 3 Weeks
The U.S. Supreme Court is expected to rule on PPACA as early as three weeks from Monday June 4, legal analysts said, following the precedent of waiting until the end of their term to release the full details of their opinions. CDMR still is expecting that (1) the individual mandate will be declared unconstitutional, (2) the insurance underwriting reforms will be deemed unconstitutional by association with the mandate, and (3) only the Medicaid expansion and a few other items with separate funding from the mandate will be allowed. This may be interpreted generally as a positive for the economy, so it’s possible it will cause the markets to rise including the health plan stocks, which have been way down.
IRS Hints It May Dump FSA Use-It-Or-Lose-It
The IRS said this week it is finally actively considering neutering or dropping the FSA rollover prohibition in regs out last week. The forced spending of FSA balances was changed in the Bush Administration to allow a grace period past December 1, but with the new limits on total spending of $2500 per participant the rationale for the mandate is gone.
Industry arguments were falling on deaf ears. But now the regs says: “The $2,500 limit, while not addressing the “use-or-lose” rule, limits the potential for using health FSAs to defer compensation and the extent to which salary reduction amounts may accumulate over time. Given the $2,500 limit, the Treasury Department and the IRS are considering whether the use-or-lose rule for health FSAs should be modified to provide a different form of administrative relief (instead of, or in addition to, the current 2½ month grace period rule).”
Leading industry attorney John Hickman told CDMR that “This is progressing slower than desired (but still progressing), and would be an invaluable CDH asset for employers that may desire to mix/match HRA and FSA – perhaps because restrictive HSA HDHP plan design is not desirable.” Comments must be submitted by August 17, 2012, and the IRS notices emphasizes that the request for comment is not a form of guidance (so don’t get your hopes up that it will be finalized before the election).
Ramthun: HSAs And HRAs Rising, Still Need Help
Former White House advisor and top industry consultant Roy Ramthun told the House HELP Committee this week that CDHPs are rising fast in the employer market, but need a list of revisions that will make them even more popular. “The consulting firm Towers Watson states that nearly 60 percent of employers have implemented account-based health plans, and that number will increase to 70 percent by 2013,” Ramthun said. “Twelve percent of employers now offer “total replacement” plans—where account-based health plans are the only option offered to employees—up from 7.6 percent in 2010. Enrollment by employees in account-based plans has nearly doubled in the past two years, from 15 percent in 2010 to 27 percent in 2012.” He observed that “preventive care was included in the original design of HSAs, long before the PPACA made it a requirement of all health plans. Data from Aetna, Cigna, EBRI, and others suggests that utilization of preventive care services is higher when individuals are enrolled in account-based health plans…”
Another misunderstood fact about CDHPs is that “HSA-qualified account-based health plans provide true catastrophic protection by virtue of their annual limits on out-of-pocket expenses. Under the PPACA, these limits will be applied to all plans starting in 2014, but account-based health plans already provide this protection and have been doing so since 2004. These limits apply both to medical and pharmacy expenses and therefore provide an extremely important benefit to people with chronic conditions and/or high annual health care expenses. Most people don’t understand that their traditional pharmacy coverage likely does not have any limit on out-of-pocket prescription expenses.”
Ramthun listed the following items needing adoption by the next Congress:
— Elimination of the ridiculous mandate that FSA and HSA members get a prescription for OTC drugs that have been approved by the FDA as not needing a prescription.
— Fixing the recent HHS regs on actuarial value which “devalue the typical employer contributions to HSAs and HRAs when determining whether a plan provides the minimum actuarial value.” HHS may cut the value of employer contributions, a mistake according to both the Congressional Budget Office and the American Academy of Actuaries.
–Correction of PPACA limits on employer deductibles in 2014 to $2000/4000 for individual/family coverage, a sure-fire way to increase employer premiums sharply.
— Revision the MLR regulations that do not take into account HSA or HRA contributions. “I have been seeking changes to the regulations to reflect the unique circumstances of account-based health plans, but no changes have been made so far.”
Seven cosponsors this week endorsed H.R. 5842: Restoring Access to Medication Act in the House. Purpose of the bill is “To amend the Internal Revenue Code of 1986 to repeal the amendments made by the Patient Protection and Affordable Care Act which disqualify expenses for over-the-counter drugs under health savings accounts and health flexible spending arrangements.” It was referred to the House Ways & Means Committee.
© Interpro Publications 2012