Health Care Reform Timeline

Blue Cross Blue Shield of Michigan is committed to working with the Obama administration and all other parties to implement this new law over the next several years. As the health care environment changes, we will continue to work in our local communities and to serve our valued members, just as we've done throughout our more than 70-year history.

 

Blue Cross Blue Shield of Michigan is committed to working with the Obama administration to implement the new law of health care reform.
Donut hole phase out began
Part D donut hole decreased via $250 rebate
Tax changes for nonprofit Blue plans
Insurer executive compensation limits
Federal funds to states for rate review of insured products
Consumer information grants to states
Grandfathered plan and enrollee status if in effect on enactment
National high-risk pool began
Early retiree reinsurance for employer-provided retiree benefits
HHS Web portal for individuals and small group
HHS regulations on state Exchange waivers
Health information technology standards
Dependant coverage to 26
Restrictions on rescissions
No pre-existing exclusion period for people under age 19
Preventive services with no cost-sharing
No lifetime limits or restrictive annual limits
Medical loss ration reporting
Patient protections
Emergency services
Medical Loss Ratio rebates
Increases HSA/MSA early withdrawal penalties
Donut hole phase out began
Medicare Advantage changes
Part D: protected classes
Prescription required for HSA, HRA, FSA reimbursement
Medicare payroll tax increased for high-wage employees and new tax on unearned income
Cap on salary-reduction contributions to health FSAs
Employer Mandate
Individual Health Coverage Mandate
Health Benefit Exchanges operational
Premium and cost-sharing subsidies for low- and middle-income individuals
Required Medicaid eligibility expansion (under 65)
Additional consumer protections and market reforms
Excise tax on high-cost group health plans (Cadillac Plan Tax)
  • Donut hole phase out begins

    Beginning in 2011, Medicare Part D enrollees who reach the "donut hole," a gap in prescription drug coverage that occurs when spending on covered Part D drugs including copays and deductibles exceeds the initial coverage limit ($2,830 in 2010), will receive a 50 percent discount on the cost of their brand-name drugs in the gap as agreed to by pharmaceutical manufacturers.
    Over time, Medicare will gradually phase in additional subsidies in the coverage gap for brand-name drugs (beginning in 2013) and generic drugs (beginning in 2011), reducing the coinsurance rates for Part D enrollees in the gap from 100 percent to 25 percent by 2020.

  • Part D donut hole decreased via $250 rebate

    In 2010 only, seniors participating in Medicare Part D received a $250 rebate when they hit the "donut hole," or gap in prescription drug coverage that occurs when spending on covered Part D drugs, including copays and deductibles, exceeds $2,830. The Department of Health and Human Services announced in April rebates would begin starting June 15. Once you hit the prescription drug donut hole, you were eligible for a $250 rebate. That check was sent directly to you from Medicare within three months of when you hit the donut hole. There was no application process and no private company involved in getting your rebate check to you.

  • Tax changes for non profit Blue plans

    Nonprofit Blue Cross plans will continue to be taxed at lower tax rates if they continue to spend at least 85 cents of every premium dollar on health care.

  • Insurer executive compensation limits

    Starting in 2010, certain types of deferred compensation paid to employees was made ineligible for deduction. Starting in 2013, health insurance companies will not be able to deduct compensation paid to employees that exceeds $500,000.

  • Federal funds to states for rate review of insured products

    Health and Human Services began working with states in 2010 to review all "unreasonable" premium increases for all underwritten plans.

  • Consumer information grants to states

    In 2010, Health and Human Services began providing $30 million in grants to states to set up health insurance consumer assistance or health insurance ombudsman programs to:

    - Assist with the filing of complaints and appeals
    - Collect, track, and quantify problems and inquiries
    - Educate consumers on their rights and responsibilities
    - Assist consumers with enrollment in plans
    - Resolve problems with obtaining subsidies

    States receiving grants must collect and report data on the types of problems and inquiries encountered by consumers. The data will be shared with state insurance regulators, the Secretary of Labor and the Secretary of Treasury to identify areas where enforcement action is necessary.

  • Grandfathered plan and enrollee status if in effect on enactment

    Health plans in which an individual is enrolled on March 23, 2010, either as part of a group or as an individual member, are called grandfathered plans. These plans have special effective dates for some health care reform requirements and are completely exempt from others. Grandfathered group plans are allowed to enroll new employees and their dependents and dependents of currently covered employees without jeopardizing their grandfathered status. Similarly, individuals in grandfathered plans may add dependents to their policies. Any plan not in existence prior to March 23, 2010 is considered a non-grandfathered plan.

  • National high-risk pool begins

    The State of Michigan began working with Health and Human Services to create a temporary high-risk pool program. There is still much information to come from the government about who exactly qualifies to be in a high-risk pool. It is likely the pool will only impact a very small percentage of the population, such as those with very high-risk pre-existing conditions who do not have insurance today and haven't had it for the last six months. This is to help expand access now until other reforms begin in 2014.

    Until all carriers are required to accept anyone, regardless of health status as we already do, people rejected for pre-existing conditions that don't qualify them for the risk pool will only have Blue Cross Blue Shield of Michigan as an option. This is why we continue to advocate for change in Michigan now to ensure everyone has broad access and choice.

    The state has approached BCBSM along with a number of other insurers to help it determine how best to move forward.

  • Early retiree reinsurance for employer-provided retiree benefits

    The early retiree reinsurance program, which pays 80 percent of the claims between $15,000 and $90,000 for early retirees between the age of 55 and 64 in a group health plan, started in July 2010. Details and directions for employers are posted on the Health and Human Services Web portal at www.eerp.gov. The deadline for applications was May 2011.

  • HHS internet portal for individuals and small group

    The Web portal at www.healthcare.gov helps consumers navigate their options in the individual and small business private market and helps them determine if they may be eligible for a variety of existing public programs, including high risk pools, Medicaid, Medicare and the Children's Health Insurance Program.

  • HHS regulations on state Exchange waivers

    Health and Human Services considered requests from states to be exempt from multiple reform provisions, such as Exchanges, essential benefits and mandates. In order to get such a waiver, states had to present an alternative plan that would provide coverage at least as comprehensive and affordable, to at least a comparable number of residents, as the federal legislation would achieve.

  • Health Information Technology standards

    Health and Human Services provided standards on how health plans will be required to manage various kinds of data and conduct financial transactions.

  • Dependant Coverage to 26

    All group health plans that offer coverage for their employees' children began extending eligibility to married or unmarried children of covered employees up to age 26. There are no additional criteria to qualify other than being a child of a policy holder under age 26. For plans not in existence (non-grandfathered plans) on or before March 23, they had to do this starting with the first plan year beginning after Sept 23, 2010. Plans that existed (grandfathered plans) on or before March. 23, 2010, had to do this with the first plan year beginning after Sept. 23, 2010, but only for adult children up to age 26 who are not eligible for employer-sponsored coverage elsewhere. Starting in 2014, the requirement for employer-sponsored coverage elsewhere goes away. BCBSM already covers dependents up to age 26 for fully-insured customer groups until the end of the calendar year and will work with self-insured customers to do the same if they choose to comply early.

  • Restrictions on rescissions

    Starting with plan years after Sept. 23, 2010, no health plan can rescind (cancel) health coverage for premium paying members except in cases of fraud.

  • No pre-existing exclusion period for people under age 19

    Anyone under 19 with a pre-existing condition cannot be denied coverage for that condition at any time starting with the first plan year beginning on or after Sept. 23, 2010. In addition, insurers are not allowed to impose waiting periods for coverage of pre-existing conditions for people under 19. Therefore, in Michigan, people under 19 with pre-existing conditions can be denied coverage by commercial carriers and will then only be able to obtain coverage from Blue Cross Blue Shield of Michigan. This will change in 2014 for everyone as the bill requires all carriers to accept everyone, regardless of health status.

  • Preventive services with no cost-sharing

    Starting with plan years beginning on or after Sept. 23, 2010, plans must provide coverage without cost-sharing for:

    - Select services recommended by the U.S. Preventive Services Task Force
    - Immunizations recommended by the Advisory Committee on Immunization Practices of the CDC
    - Preventive care and screenings for infants, children and adolescents supported by the Health Resources and Services Administration
    - Preventive care and screenings for women supported by the Health Resources and Services Administration

  • No lifetime limits or restrictive annual limits

    Beginning with the first plan year on or after Sept. 23, 2010, plans may not place lifetime limits on essential health benefits, and only "restricted" annual limits (to be defined by HHS) will be permitted on essential benefits (this annual limit provision does not apply to grandfathered individual plans). Beginning with plan years starting after Jan. 1, 2014, there will be no annual limits on essential health benefits.

    Health and Human Services still has to define "essential health benefits."

  • Medical loss ration reporting

    Medical loss ration is the percentage of health insurance premiums spent by an insurance company on health care services. The reform law requires that large group plans spend 85 percent of premiums on clinical services and activities for the quality of care for enrollees. Small group and individual market plans must devote 80 percent of premiums to these purposes. Since Sept. 23, 2010, health plans have been required to report MLRs to Health and Human Services.

  • Patient protections

    All new plans starting on or after Sept. 23, 2010, that provide for designation of a primary care provider must allow the choice of any participating primary care provider who is available to accept them, including pediatricians. A plan may not require authorization or referral for a female patient to receive obstetric or gynecological care from a participating provider and must treat their authorizations related to OB/GYN services as the authorization of a primary care provider. This is already law in Michigan, and all carriers comply.

  • Emergency services

    If a plan provides coverage for emergency services, the plan must do so without prior authorization, regardless of whether the provider is a participating provider. Services provided by nonparticipating providers must be provided with cost-sharing that is no greater than that which would apply for a participating provider and without regard to any other restriction other than an exclusion or coordination of benefits, an affiliation or waiting period, and cost-sharing.

  • Medical Loss Ratio Rebates

    Medical loss ratio is the percentage of health insurance premiums spent by an insurance company on health care services. Starting Jan. 1, 2011, insurers must provide a rebate to consumers if the percentage of premiums expended for clinical services and activities that improve health care quality is less than 85 percent in the large group market and 80 percent in the small group and individual markets.

  • Increases HSA/MSA early withdrawal penalties

    Starting Jan. 1, 2011, the penalty for withdrawals from health savings accounts that are not used for qualified medical expenses increased from 10 percent to 20 percent, and the penalty for unqualified withdrawals from Archer Medical Savings Accounts increased from 15 percent to 20 percent

  • Donut hole phase out begins

    Beginning in 2011, Medicare Part D enrollees who reach the "donut hole," a gap in prescription drug coverage that occurs when spending on covered Part D drugs including copays and deductibles exceeds the initial coverage limit ($2,830 in 2010), will receive a 50 percent discount on the cost of their brand-name drugs in the gap as agreed to by pharmaceutical manufacturers.

    Over time, Medicare will gradually phase in additional subsidies in the coverage gap for brand-name drugs (beginning in 2013) and generic drugs (started in 2011), reducing the coinsurance rates for Part D enrollees in the gap from 100 percent to 25 percent by 2020.

  • Medicare Advantage changes

    For some individuals with Medicare Advantage plans, coverage stayed the same or improved. For others, benefits may have been reduced or cost-sharing may have increased. Medicare Advantage benefits that may have been reduced included additional benefits often associated with these kinds of plans, such as reduced cost-sharing, free eyeglasses and gym memberships. BCBSM continues working to minimize impacts and to ensure that our Medicare Advantage plans receive reimbursement for providing high quality care. Original (Basic) Medicare benefits will not be reduced.

  • Part D: protected classes

    There are six "protected classes" of drugs that health plans are required to include in Medicare Part D prescription coverage. Health and Human Services considered expanding this to include more drugs. The six protected classes include antidepressant, antipsychotic, anticonvulsant, antiretroviral, immunosuppressant and antineoplastic drugs. Protected classes were identified in 2008 to ensure Medicare Part D enrollees would have coverage for drugs they already use to control certain conditions.

  • Prescription required for HSA, HRA, FSA reimbursement

    A physician prescription became required for over-the-counter drugs, medicines and biologicals to be considered eligible for reimbursement for health reimbursement accounts, health savings accounts or flexible spending accounts.

  • Medicare payroll tax increased for high-wage employees and new tax on unearned income

    Individuals earning more than $200,000 and couples earning more than $250,000 will pay 2.35 percent as a Medicare payroll tax on the income above those thresholds, instead of the current rate of 1.45 percent. Individuals and couples at these earnings levels will also pay an additional 3.8 percent tax on unearned income, such as interest and dividends from investments.

  • Cap on salary-reduction contributions to health FSAs

    Flexible Spending Account contributions are limited to $2,500 per year, indexed for inflation.

  • Employer Mandate

    Employers with an average of at least 50 employees during 121 days or more in the preceding calendar year are required to offer "minimum essential coverage" to full-time employees and their dependents. Part-time workers are converted to full-time equivalents by adding all hours worked by part-time workers during the month and dividing by 120 to determine whether the employer has more than 50 full-time employees. Seasonal employees are excluded from the calculation. In determining penalties, employers can exclude the first 30 employees from their calculations.

    Employers with more than 50 full-time employees that do not offer coverage or that offer coverage that does not qualify as "minimum essential coverage" must pay an "assessment" of $2,000 times the number of full-time employees if at least one full-time employee receives government-subsidized coverage through an insurance exchange. If the employer offers "minimum essential coverage," but a full-time employee receives government subsidized coverage through an insurance exchange anyway, the employer must pay an "assessable payment" equal to the lesser of $3,000 for each employee receiving a subsidy or $2,000 for each full-time employee. There is no assessment if the employee's share of the cost of coverage is between 8 percent and 9.5 percent of income.

  • Individual Health Coverage Mandate

    Citizens and legal residents are required to have "minimum essential coverage." Beginning 2016, the tax penalty for noncompliance is the greater of $695 per year, up to a maximum of $2,085 per family, or 2.5 percent of modified gross income. Lower penalties apply during the phase-in period in 2014 and 2015. The $695/$2,085 penalties are indexed for inflation beginning 2017. Exceptions will be made for financial hardship, religious objections, Native Americans, those without coverage for less than three continuous months, whenever the lowest cost plan option costs more than 8 percent of income, or whenever the individual's income is below the tax filing threshold, which is $9,350 for individuals, $18,700 for couples under age 65 without children, and $26,000 for couples under age 65 with two or more children in 2010.

  • Health Benefit Exchanges operational

    Individuals (U.S. citizens and legal immigrants) and small employers with an average of 100 or fewer employees in the previous calendar year may purchase insurance from state-run exchanges beginning in 2014 (or small employers with an average of 50 or fewer employees in the previous calendar year if the state so permits until 2016). If the state agrees, large employers with an average of at least 101 employees in the previous calendar year may also purchase from the exchange beginning in 2017.

    All carriers doing business in Michigan may participate by offering products on the exchange. Five tiers of coverage are offered through the exchange:


    - Bronze — provides minimum essential benefits, covers at least 60 percent of actuarial value* of covered benefits, with out-of-pocket limit equal to current limits on HSAs ($5,950 for individuals and $11,900 for families, in 2010)
    - Silver — provides minimum essential benefits, covers at least 70 percent of actuarial value* of covered benefits, with HSA out-of-pocket limits
    - Gold — provides minimum essential benefits, covers at least 80 percent of actuarial value* of covered benefits, with HSA out-of-pocket limits
    - Platinum — provides minimum essential benefits, covers at least 90 percent of actuarial value* of covered benefits, with HSA out-of-pocket limits
    - Catastrophic — similar to high-deductible health plan, except available only to individuals up to age 30 in the individual market and persons not able to find affordable coverage (less than 8 percent of income)

    Reduced out-of-pocket limits apply to individuals with incomes up to 400 percent of the federal poverty level.

    *Actuarial value means that the health insurance coverage selected is estimated to cover a certain percentage of a member's costs. Therefore, a plan with a 60 percent actuarial value is estimated to cover 60 percent of a member's total health care costs, leaving the member responsible for the remaining 40 percent. This is an average estimate for a standard population. How much the plan actually covers can vary significantly from person to person.

  • Premium and cost-sharing subsidies for low- and middle-income individuals

    A government subsidy is available to U.S. citizens and legal residents with incomes of up to 400 percent of the federal poverty level to purchase coverage through an insurance exchange. This is not available if coverage is available from an employer plan, unless the plan covers less than 60 percent of an employee's medical costs (60 percent actuarial value or lower) or the employee's contributions exceed 9.5 percent of household income.

  • Required Medicaid eligibility expansion (under 65)

    Starting Jan. 1, 2014, Medicaid eligibility is expanded to all individuals under age 65 with incomes up to 133 percent of the federal poverty level. States are also required to offer premium assistance for cost-effective employer coverage of Medicaid-eligible working adults.

  • Additional consumer protections and market reforms

    Health insurers must accept all applicants regardless of pre-existing condition and health status and must use adjusted community rating. They must also guarantee renewal for individuals.

  • Excise tax on high-cost group health plans (Cadillac Plan Tax)

    A 40 percent excise tax will be imposed on insurers (for insured coverage) and third-party administrators (for self-insured coverage) when the annual value of an employee's health coverage, including medical, prescription, HRA, health care FSA, and employer HSA contributions exceeds $10,200 for an individual or $27,500 for a family.

    Threshold values are indexed to changes in the consumer price index. For retirees age 55 to 64, the threshold is raised by $1,650 for individuals and $3,450 for families.

    The threshold is also raised for certain high-risk professions, including law enforcement, fire protection, certain utility workers and others. The threshold is also adjusted to reflect higher health care costs attributable to age, gender or health status in the workforce. Employers are responsible for calculating the value of excess coverage using COBRA rules and for making reports to insurers and the government.

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