Consumer Driven Market Report Capitol Hill Update

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