"Insurance Market Reforms"

Some of the insurance market reforms are designed to make insurance easier for employers to obtain and afford, rather than impose new requirements on employer health plans, and might benefit employers with insured plans. All of these changes apply solely to insurance companies and thus are relevant solely to employers with insured health plans.

Change effective immediately:

  • Review of premium increases. HHS, in conjunction with the states, is required to establish a process for reviewing increases in health insurance premiums. The process will require a health insurance issuer to submit, to HHS and the relevant state, "a justification for an unreasonable premium increase prior to the implementation of the increase." On April 14, HHS issued a request for public comments on how to implement this provision.

Change effective for plan years beginning on or after September 23, 2010:

  • Insurers required to pay premium rebates. A health insurance company must pay rebates to enrollees if its medical loss ratio ("MLR") (generally the ratio of actual health care expenditures to premiums) for a product falls below 85% (80% in the small group market), averaged over three years. It is not clear what "plan year" means in the effective date here, as this provision applies solely to health insurance companies. It also is not clear how rebates should be shared between employers and employees. HHS is responsible for issuing regulations implementing this rule, in consultation with the National Association of Insurance Commissioners (NAIC). On April 14, HHS issued a request for public comments on how to implement this provision.

Change effective for plan years beginning on or after January 1, 2014:

  • Guaranteed availability for large employers. The guaranteed availability requirement that currently applies to health insurance issuers in the small group health market is extended to health insurance issuers in the large group market, as well. Thus, insurance companies must accept every employer in states in which they operate, even larger employers, and may not turn down employers with older or sicker workforces. It is not clear what "plan year" means in the effective date here, as this provision applies solely to health insurance companies.

Temporary insurance programs for early retirees

HHS is required to establish a temporary insurance program "to provide reimbursement to participating employment-based plans for a portion of the cost of providing health insurance coverage to early retirees" and their spouses and dependents. The program will exist from June 1, 2010, until January 1, 2014, when "Exchanges" first become available. Federal funding for the program is capped at $5 billion. Therefore interested employers will need to act quickly once applications to participate in the program become available (expected in June). HHS released initial guidance on qualifying for the program on May 4.

Tax credits

PPACA provides tax credits to small employers and (as noted below) lower-income employees to help them purchase health insurance. The tax credit for small employers is available immediately, applies to employers with no more than 25 full-time equivalent employees, and covers up to 50% of the employer portion of the premiums. The IRS has already provided guidance on this credit on its web site.