Small group health care reform

FAQs

• Is our Group plan Grandfathered?
  Group health plans and health insurance plans that were in place on March 23, 2010, when the PPACA was enacted, are called grandfathered plans and are exempt from some elements of the law. However, to maintain grandfathered status, a plan cannot reduce or eliminate benefits, increase employee cost-sharing above certain thresholds, or reduce the employer share of the premium payment. Once a plan loses its grandfathered status, it must comply with all applicable requirements of the law. It is the employer group’s responsibility to determine if the plan is grandfathered or not.
• Since the PCORI Fee is embedded, does HAP file the form 720 (Quarterly Federal Excise Tax Return), or does the employer need to file it? If HAP files the form, can we get a copy of the filing for our group?
  HAP will file form 720 for all fully-insured members enrolled with HAP and Alliance. This filing will not be broken down by employer group, thus we are not able to provide a copy of the filing at the group level.
• How did HAP calculate the Health Insurance Premium Tax percentage for 2014 for HMO groups?
  The final premium tax for HMO accounts for 2014 is 1.15 percent, which equates to a per member per month (PMPM) of approximately $4.46 on average. This was calculated based on HAP’s estimated fee of $14.7 million (50 percent of full fee due to not-for-profit status), which then is broken out between our Medicare and Commercial book of business. For Commercial, based on our projected 2014 premium platform and associated insured member months, we calculate a needed fee of $10.9 million, which results in a charge of 1.15 percent, or $4.46 PMPM.
• How did HAP calculate the Health Insurance Premium Tax percentage for 2014 for Alliance groups?
  The final premium tax for Alliance accounts for 2014 is 1.55 percent, which equates to a per member per month (PMPM) of approximately $3.59 on average. This was calculated based on the Alliance estimated fee of $2.7 million, which then is broken out between our Medicare and Commercial book of business. For Commercial, based on our projected 2014 premium platform and associated insured member months, we calculate a needed fee of $2.1 million, which results in a charge of 1.55 percent, or $3.59 PMPM.
• For small groups, will the taxes and fees be embedded in the renewal rate, or charged as separate line items?
  HAP will administer taxes and fees for small groups based on plan type, as shown in the table below:

  Plan Type	Embedded	Separate Line Item	Not Charged
  Transitional Plans (Plans renewed in 2013 that extend into 2014 and are not grandfathered)	PCORI Fee*	Premium Tax HICCA	Exchange User Fee
  Grandfathered	PCORI Fee*	Premium Tax HICCA	Exchange User Fee
  Essential Health Benefits Plans (PPACA-compliant)	PCORI Fee* Premium Tax Exchange User Fee HICCA

  * The PCORI Fee became effective in 2012.
• When do these taxes and fees go into effect?
  The HICCA Tax and PCORI Fee are already in effect. All other taxes and fees for small groups are effective on Jaunary 1, 2014 or upon renewal.
• Does the Exchange User Fee apply only to plans purchased through the Health Insurance Marketplace?
  All Essential Health Benefit (PPACA-compliant) plans will be subject to the Exchange User Fee, regardless of whether they are purchased on- or off-exchange (Health Insurance Marketplace). The Exchange User Fee pays for access to marketplaces facilitated by the federal government, and is spread across all individual and small group products effective on or after January 1, 2014.
• What is a small group?
  For small group plans issued or renewed on or after January 1, 2014, the Michigan Marketplace defines a small employer as two to 50 full-time equivalent employees (FTEs).
• How have ratings rules changed?
  All non-grandfathered small-group plans issued or renewed on or after January 1, 2014, must comply with the law’s new, adjusted community rating rules. Premium prices can be determined using the following four factors:

  • Per Member/Per Month (PMPM) rating: Premium cost by member, rather than tiered contract, capped at the three highest priced dependents, not including spouse or dependents 21 or older
  • Geographic rating: Michigan has defined 16 geographic areas in the small group market; rates will be based on the employer’s primary zip code
  • Age rating ratio: Members of a small group, age 21 and older, cannot be charged more than three times the rate of a younger person for the same policy (HAP will use a prescribed age curve for ages 21 to 64)
  • Tobacco ratio: Tobacco users cannot be charged more than 1.5 times the non-tobacco users’ price

  Note that these factors do not include health status, gender, or industry type.