Illinois Civil Union Clarification

Here are a few more details about the Illinois Religious Freedom Protection and Civil Union Act (PA 96-1513) that takes effect on June 1, 2011. The Illinois Department of Insurance has released their guidance on the law. It can be viewed here.

• For all fully insured plans, the effective date of the new law is June 1, 2011.
• Starting June 1, 2011, the date a civil union partnership is officiated will be considered a qualifying event. Employees, spouses and dependents can enroll in the plan due to this qualifying event and the plan will be effective on the date the civil union is officiated.
• For existing civil unions, there will be a 30-day special enrollment period beginning on June 1, 2011 to enroll an existing civil union partner from a union officiated in another state before June 1, 2011. A civil union officiated in another state will be recognized as a civil union in Illinois as of June 1, 2011. From Health Alliance Medical Plans
  

Health Alliance: Illinois Civil Union Law Effective June 1

The Illinois Religious Freedom Protection and Civil Union Act (PA 96-1513) takes effect on June 1, 2011. The new law provides civil union partnerships between same-sex and opposite-sex partners with the same state law protections as those provided under marriage.

As a result of the new law, Health Alliance will now offer coverage to a legally recognized civil union partner as standard. A legally recognized civil union partner shall also be included in any definition or use of the terms spouse, family and dependent, as these terms are used for insurance coverage purposes. This law does not apply to self-funded ERISA plans in which the term spouse would be in accordance with federal law.

Unlike domestic partnership, a civil union partnership is officiated by a judge, public official or any person with the power to solemnize marriages under Illinois law. The date a civil union is officiated would be treated as a qualifying event for special enrollment under a group health insurance plan to add a legally recognized civil union partner as a dependent of the enrollee. In addition, the State of Illinois will automatically recognize an existing same-sex marriage or a civil union officiated in another state as an Illinois civil union partnership starting June 1, 2011. Employers and brokers may contact their account representatives for details.

For My Health Alliance individual plan plans, the applicant would make a selection on the Health Alliance standard application supplemental form that they are applying for coverage of a civil union partner. Coverage would be effective on the first day of the month following underwriting approval for coverage.

Should the Illinois Department of Insurance issue guidance on civil unions, Health Alliance will provide additional details.

PPACA: CMS Sticks with 10% Rate Review Trigger

The Centers for Medicare and Medicaid Services (CMS) plans to use a 10% cut-off to decide whether to look more closely at individual and small group health insurance rate hikes in states.

The 10% threshold will apply both in states where CMS handles rate reviews and in states that do the reviews themselves, officials say.

CMS, an arm of the U.S. Department of Health and Human Services (HHS), will begin to apply the review program rules Sept. 1.

Starting Sept. 1, 2012, each state will get its own review threshold, officials say.

CMS has described the rate review program regulations in an early version of the 94-page Rate Increase Disclosure and Review final rule.

The final rule, set to appear Monday in the Federal Register, will implement Section 1003 of the Patient Protection and Affordable Care Act of 2010 (PPACA).

PPACA Section 1003 requires HHS and the states to develop a process for conducting annual reviews of “unreasonable increases in premiums for health insurance coverage.”

HHS is encouraging states to conduct their own rate reviews. In states where regulators cannot or will not conduct reviews, an arm of CMS will conduct the reviews.

Originally, the rules were set to take effect July 1; CMS responded to pleas for relief from industry commenters by pushing the effective date back two months.

Many state regulators and insurance industry commenters also had asked CMS to reconsider using a 10% review threshold in every state. They suggested that the 10% threshold would lead to reviewers reviewing virtually all proposed rate increases in many states.

CMS declined to change cut-off.

PPACA Section 1003 gives CMS the authority to require justification and disclosure of proposed rate increases but no direct authority to block rate increases.

“However, if an issuer fails to comply with the requirements set forth in this final rule, CMS could seek a court order against the issuer to enforce compliance,” officials say in the preamble to the final rule.

Many insurance industry commenters had asked CMS to establish safe harbors or an expedited rate review procedure.

The commenters asked, for example, for a rate increase that seemed likely to satisfy the new federal minimum medical loss ratio requirements for individual and small group health insurance.

“We have not modified the final rule to provide safe harbors or expedited rate review procedures given that many factors are relevant in determining whether a particular proposed rate increase is unreasonable, thus supporting the need for a more detailed review process,” officials say.

Also in the preamble, CMS officials say:

• The definition of the word “state” used in the rate review program regulations includes District of Columbia, Puerto Rico, the Virgin Islands, Guam, American Samoa and the Northern Mariana Islands.
• A state that reviews rates itself and excludes short-term health insurance from its definition of “individual health insurance” can keep short-term health insurance out of the rate review program.
• The rate review program will not affect grandfathered health insurance, retiree-only health plans or self-funded health plans.

CMS officials say they have not made up their mind about how to handle individual or small group coverage provided through associations.

CMS has included a list of questions aimed at commenters with an interest in the association health plan market.

CMS may grant confidential status for some information submitted to rate reviewers on a case-by-case basis.

Today, however, “based on a review of state filing guidelines and state websites, it appears at least 12 states do not redact any information when making rate filings available to the public,” officials say.

Karen Ignagni, president of America's Health Insurance Plans (AHIP), Washington, put out a statement suggesting that focusing solely on health insurance premiums while ignoring the underlying medical cost drivers will do nothing to make coverage more affordable.

"The public policy discussion needs to be enlarged to focus on the soaring cost of medical care that threatens our economic competitiveness, our public safety net, and the affordability of health care coverage," Ignagni says. “Health plans are doing their part to restrain health care cost growth by partnering with providers across the country to change payment models to promote and reward safe, high-quality, cost-effective care.

“Premium review must adequately factor in all of the components that determine premium rates, including geographic variation, the cost of new benefit mandates, and the impact of younger and healthier people dropping coverage. An arbitrary threshold for review will establish a de facto presumption of unreasonableness in what should be an objective, actuarially-based evaluation."

Any reviews that are conducted should be done at the state level, because state officials have the experience, infrastructure, and local market knowledge needed to ensure that consumers are protected and that health plans are solvent, Ignagni says.

Employee health care deductibles rising

Employers continue to boost deductibles, particularly for out-of-network services, as health care costs show no signs of easing, according to a survey released Wednesday.

Twenty-two percent of employers imposed deductibles of at least $1,000 this year for in-network services for their health care plans that had the largest enrollment, up from 16% last year and just 8% in 2008, according to PricewaterhouseCoopers L.L.P.

Double that percentage of employers—44%—imposed deductibles of at least $1,000 for out-of-network services, up from 29% in 2010. As recently as 2008, only about 20% of employers imposed deductibles of $1,000 or higher on out-of-network services, according to the survey of more than 1,700 employers.

“The biggest change in the past two years has been the increase in cost-sharing with employees,” said Michael Thompson, a PwC principal in New York. Increased cost-shifting has come as health care cost increases continue to outstrip increases in corporate profits as well as employee wages, he said.

Rising health care costs add pressure on employers already affected by the difficult economy, but boosting employee cost-sharing may make employees more careful consumers of services, Mr. Thompson said.

Premium contributions

On the other hand, employers have limited increasing employees’ premiums. For example, 31% of employers require employees to pay less than 20% of the total premium for family coverage this year, virtually unchanged from last year, according to the survey.

“Employers have been careful not to shift premium costs to employees, but have decided that the better way to shift costs is to require those who use health care services to pay more,” Mr. Thompson said.

The survey also found a surge in employees enrolling in high-deductible, consumer-driven health care plans.

This year, 17% of employers reported that the greatest percentage of their employees was enrolled in high-deductible plans, up from 13% in 2010 and 8% in 2009. By contrast, 57% of employers reported that traditional preferred provider organizations had the highest enrollment this year, down from 63% last year.

(Business Insurance)