Reform Highlights

Most early reform provisions went into effect when employers and individuals renewed their health insurance coverage during the 12-month period starting October 1, 2010. Some changes apply to all employer group coverage and plans. The changes include:

No pre-existing condition exclusions for children under the age of 19 (details)
Coverage of dependents until age 26 (details)
No lifetime dollar limits (details)
Limited annual dollar limits (details)
No rescissions except in cases of fraud or intentional misrepresentation (details)
Important changes to FSAs, HRAs, HSAs, and MSAs (details)

The following changes do not apply to grandfathered plans but do apply to all other plans:

First-dollar coverage of preventive services (details)
Open choice of primary doctor/pediatrician (details)
Matching cost-sharing for emergency care out-of-network (details)
Ban on salary-based discrimination (details)
New rules for benefit appeals and grievances

We encourage you to explore this site, read the details about each of these reforms, and visit our Frequently Asked Questions pages (for employers and individual members) to learn more about how health care reform may affect you and your family. We are committed to implementing these important changes while still providing you with the same caring service and high-quality coverage you have come to expect from UPMC Health Plan. If you have questions that aren’t answered on our website, please contact us.

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No pre-existing conditions exclusions for children under the age of 19

Effective for plan years that begin on or after September 23, 2010, health plans will no longer be able to limit benefits or deny coverage to children under age 19 who have pre-existing conditions. In the past, families of children with pre-existing conditions have found it difficult to get health insurance and, in cases when they did, to afford it. Under the Affordable Care Act, children with pre-existing conditions can no longer be denied coverage. Beginning in 2014, the ban on using pre-existing conditions to set premium rates or to deny coverage will apply to all ages.

This change does not apply to grandfathered individual plans.

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Extending dependent coverage to age 26

Young adults are among the fastest growing age group at risk for being uninsured. In the past, dependents covered on their parents' or guardians' health plans "aged out" of health care coverage at age 19 or upon graduation from college.

The Affordable Care Act extends coverage to dependents until their 26th birthday, regardless of financial dependency, living arrangements, employment,* or student or marital status. Coverage does not extend to children of dependents (grandchildren). Extending coverage to dependents up to age 26 is required of all health plans when coverage is renewed on or after September 23, 2010. During your employer’s open enrollment period, you may now be able to enroll your older children — up to age 26.

*Dependents whose parents or guardians are members of grandfathered plans may still be excluded from this new provision if coverage is available to the dependent under another employer-sponsored group health plan.

Note: Enrollment is subject to the other applicable eligibility terms in your Certificate of Coverage or Summary Plan Description.

For more information regarding your plan renewal date, questions about whether your plan is a grandfathered plan, or to enroll your dependent children, contact your employer.

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Lifetime limits

The Affordable Care Act restricts health plans from putting lifetime limits on the “essential health benefits” of covered individuals. Although the Department of Health and Human Services has not yet published a complete and thorough list of benefits that will be considered “essential benefits,” the Department has stated that the following categories will, at a minimum, be on the list:

Ambulatory patient services
Emergency services
Hospitalization
Maternity and newborn care
Mental health and substance use disorder services, including behavioral health treatment
Prescription drugs
Rehabilitative and habilitative services and devices
Laboratory services
Preventive and wellness services and chronic disease management
Pediatric services, including oral and vision care

This ban on lifetime limits applies to all health plans, regardless of grandfather status, beginning on or after September 23, 2010. UPMC Health Plan members will not see any change to their coverage based on this new provision, as most UPMC Health Plan coverage options do not impose lifetime limits on members.

UPMC Health Plan is dedicated to making sure our members are aware of changes that will affect them as a result of health care reform. Visit our website often. We will add information as details become available regarding what the Department of Health and Human Services considers an “essential health benefit.”

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Annual limits

In addition to the ban on lifetime limits, the Affordable Care Act requires a phasing out of any annual limits imposed by health insurers until January 1, 2014, when there will be a complete ban on annual limits for “essential health benefits.” [See the section on lifetime limits for a list of "essential health benefits."] This phasing out of annual limits applies to all plans, including grandfathered plans.

The following schedule outlines how annual limits will be restricted between now and January 1, 2014. Annual limits for essential health benefits must be at least:

$750,000 for plan years beginning on or after September 23, 2010, but before September 23, 2011;
$1.25 million for plan years beginning on or after September 23, 2011, but before September 23, 2012; and
$2 million for plan years beginning on or after September 23, 2012, but before January 1, 2014.

These annual limits apply to individuals, not to an entire covered family, so that one costly medical episode for a covered individual will not affect the benefits of another covered individual in the same family. Annual limits for non-essential health benefits are allowed if permitted by federal or state law. UPMC Health Plan currently places very few annual limits on benefits, so members are not expected to see much change prior to January 1, 2014, when all annual limits on essential health benefits will be banned.

Visit our website often. We will add information as details become available regarding what the Department of Health and Human Services considers an “essential health benefit.”

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Ban on rescissions

A rescission is: (a) a cancellation that treats coverage as void from the time of enrollment or (b) a cancellation that voids benefits paid before the cancellation.

Under the Affordable Care Act (ACA), all health plans and insurers, whether grandfathered or not, will be prohibited from rescinding the benefits of a covered individual absent fraud or intentional misrepresentation on the part of that individual. Plans and insurers that rescind coverage must give 30 days' advance written notice to the affected individual(s) to allow time to appeal the rescission.

If you have any questions about rescissions or any other aspect or requirement of the ACA, please contact us.

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Important changes to FSAs, HRAs, HSAs, and MSAs

Effective January 1, 2011, over-the-counter drugs are no longer eligible for reimbursement under Flexible Spending Accounts (FSAs) or Health Reimbursement Arrangements (HRAs) unless they are prescribed by a physician. Similarly, over-the-counter drugs no longer count as qualified medical expenses under Health Savings Accounts (HSAs) or Medical Savings Accounts (MSAs) unless the drugs are prescribed by a physician.*

*These restrictions do not apply to insulin.

The following items, for example, are no longer eligible for reimbursement unless you have a prescription:

Acid control medicines
Allergy and sinus medications
Cold and flu medications
Cough suppressants
First aid ointments or sprays
Laxatives
Pain relievers
Sleep aids
Sunscreen

However, you may continue to use your FSA, HRA, HSA, or MSA to pay for prescription drugs, copayments, deductibles, coinsurance, and vision and dental expenses.

Also, medical equipment, supplies (for example, bandages), and diagnostic devices can still be reimbursed by an FSA or HRA and can count as tax-free qualified medical expenses under an HSA or MSA. Prescriptions are not necessary for these items.

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First-dollar coverage for preventive services

The Affordable Care Act requires health insurers (group and individual) and self-funded plans to provide certain preventive services received from in-network providers at no cost to covered individuals. Prior to reform, UPMC Health Plan covered a variety of preventive services, some with no cost-sharing requirements. Now this list has been greatly expanded, which will help covered persons to further reduce their out-of-pocket expenses and possibly avoid or delay preventable diseases. Regular checkups for children and babies will be offered with no out-of-pocket expense. Depending on a covered individual’s age and gender, covered preventive services may also include:

Biometric screening
Vaccinations and flu shots
Counseling for smoking cessation
Counseling for weight loss
Some cancer screenings

Certain services, like those listed below, will also be offered with no out-of-pocket expense:

Well-baby visits
Certain cancer screenings
High blood pressure screenings

The U.S Department of Health and Human Services provides a complete list of the preventive services that will be available at no cost-sharing to you.

All plans, except grandfathered plans, will be required to offer preventive services upon enrollment or renewal on and after September 23, 2010. Grandfathered plans are exempt from these changes.

Please note that although these preventive services are free to covered individuals, subsequent treatment and products for illness or disease discovered by preventive services may be subject to copayments, coinsurance, and/or deductibles.

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Choice of health care professionals

One of the initiatives of the Affordable Care Act (ACA) is to improve consumers’ ability to get the care they need and to eliminate some of the administrative burdens required to get that care. In the past, some insurers restricted the list of physicians who could serve as primary care physicians (PCPs). Sometimes members were required to take multiple steps to get referrals or authorizations to see specialists.

Under the Patient Protection provisions of the ACA, individual, group, and self-funded health plans that require members to choose or be assigned a PCP must allow each member to choose any in-network PCP (or pediatrician for covered children) who is available to accept new patients.

In addition, individual, group, and self-funded plans that require designation of an in-network PCP (as stated above) and provide coverage for ob-gyn care may not require a female member to first obtain authorization or a referral from a PCP (or the insurance company) before receiving ob-gyn services.

UPMC Health Plan continues to be committed to making sure its members receive the best and most convenient care possible. Our members will see no change with the new requirements because UPMC Health Plan already meets them. Our members are not restricted to a subset of in-network doctors or pediatricians they may choose as their PCP, and referrals or prior-authorization for ob-gyn services are not necessary. For more information about this or other health reform questions, please contact us.

These direct access requirements apply to non-grandfathered individual, group, and self-funded plans when they enroll or renew coverage on or after September 23, 2010. Grandfathered plans are exempt from this provision.

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Coverage for emergency services

Under the Affordable Care Act, health plans (including non-grandfathered individual, group, and self-funded plans) that cover emergency services must cover emergency services without requiring prior authorization, even when a member is treated at an out-of-network emergency facility. Additionally, the out-of-pocket costs (copayments and coinsurance) paid by a member must be the same for in-network and out-of-network emergency care.

UPMC Health Plan understands that no one can predict when or where an emergency requiring medical attention will occur and has always covered emergency services without prior authorization. We will continue to do this, as well as equalize in-network and out-of-network cost sharing under the new law.

Grandfathered plans are exempt from this provision. Please contact us with any questions you may have about this or other requirements of the health care reform law.

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Ban on salary-based discrimination

Under the Affordable Care Act, fully insured group health plans will not be permitted to charge different premium rates, provide better benefit packages, or establish any eligibility rules for coverage that favor highly compensated individuals.

This provision applies to all fully insured group health plans (except grandfathered group plans) when they enroll or renew on or after September 23, 2010. The IRS has delayed application of penalties under this provision until additional guidance is issued. Click here to read the official IRS notice of this delay (Notice 2011-1).

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New Appeals Procedures under the Patient Protection and Affordable Care Act (the "ACA")

The Affordable Care Act requires non-grandfathered group health plans and health insurers in the group and individual markets to follow new guidelines when providing members with notices of any adverse benefit determinations, or when reviewing those determinations as part of a member's appeal (both internally within the health plan and through external review by a third party).

These new rules will provide consumers with more information about adverse benefit determinations and their rights to appeal those determinations, and will establish a standard set of rules for all members and health plans to follow during any appeal. A summary of some of the changes are below. If you have questions about appealing a benefit determination, we encourage you to contact UPMC Health Plan Member Services at 1-888-876-2756.

Changes to Member Information

Providing notices in non-English languages
Members of both group and individual products may be entitled to receive notice of adverse benefit determinations in non-English languages. Members to whom this applies will be so notified when they receive an adverse benefit determination.
Providing diagnosis and treatment codes (and their meanings) to members
Members who receive an adverse benefit determination may request that their health plan provide them with relevant diagnosis and treatment codes (and their meanings).

Internal Appeals Requirements
The following requirements must be implemented beginning on or after January 1, 2012:

Expedited notification of initial benefit determinations involving urgent care
Plans must provide initial determinations for appeals involving urgent care claims within 72 hours.

External Review Requirements
Below are the changes to the external review requirements:

HHS determination regarding external reviews
In August 2011, HHS released its preliminary determinations regarding external review processes in each state. HHS determined that Pennsylvania's existing external review process does not currently meet certain federal requirements. Therefore, beginning January 1, 2012, insurers and self-funded plans in Pennsylvania must follow alternative external appeals processes; either an HHS-administered or a Private Independent Review process. Pennsylvania will be permitted to administer its own external review process in the future if it makes changes to meet the new federal standards.

If you have any questions regarding any of the information above, please contact UPMC Health Plan Member Services at 1-888-876-2756.

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Health Insurance Exchanges (2014)

In 2014, the Affordable Care Act authorizes each state to create its own Health Insurance Exchange. The law discusses two types of Exchanges: The "American Health Benefits Exchange" for individuals and the "Small Business Health Options (SHOP) Exchange" for small employers. Each state may operate both Exchanges separately, operate one combined Exchange for both individuals and small groups, or decline to operate its own Exchange altogether. Consumers in states that do not have their own Exchange will still be able to purchase coverage through a federally facilitated Exchange.

The Exchanges are expected to be a transparent and competitive insurance marketplace where individuals and small businesses can go to compare and purchase affordable and qualified health benefit plans, including plans from UPMC Health Plan. They are designed to make buying health coverage easier, by providing easy-to-understand information on costs and benefits that allow consumers to compare a wide variety of available products; and more affordable, by promoting increased competition among health insurers through new market and product standards.

Each Exchange will offer a range of robust coverage options so consumers can choose the level of coverage that is right for them. Each coverage option (known as a "Qualified Health Plan") sold on the Exchange will be classified among four categories — Bronze, Silver, Gold, and Platinum (sometimes referred to as the "precious metals") — based on the portion of health care costs that is covered by the plan. Certain consumers under age 30, or individuals for whom the "precious metals" options are considered to be unaffordable, may also be eligible to purchase an alternative "Catastrophic" coverage. While cost-sharing may differ among plans, every Qualified Health Plan sold on the Exchange must cover the same broad set of "Essential Health Benefits."

In November 2011, Pennsylvania announced that it will develop its own Exchange. Click here for more information on Health Insurance Exchanges.

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Plan Fees for Comparative Effectiveness Research (2012)

The Affordable Care Act established the Patient-Centered Outcomes Research Institute (PCORI) and its funding mechanism, the Patient-Centered Outcomes Research Trust Fund (PCORTF). PCORI was created to research the effectiveness, benefits, and harms of different medical treatment options (commonly known as "comparative effectiveness research"). Funding for PCORTF and the operations of PCORI are provided in part through annual fees collected from health insurers and self-funded health plan sponsors.

For each policy year beginning after October 1, 2011, fully-insured carriers and self-funded plan sponsors will be assessed a fee of $1 per covered individual.
For each policy year beginning after October 1, 2012, the fee will increase to $2 per member.
For each policy year beginning after October 1, 2013, the annual fee increase will be indexed to the per capita increase in National Health Expenditures.
These fees are currently scheduled to cease being collected in 2019.

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Uniform Summary of Benefits and Coverage (2012)

Health insurance issuers in group and individual markets and group health plan sponsors (or their designated administrators) will be required to compile and provide to consumers and members a standardized Summary of Benefits and Coverage (SBC) and a Uniform Glossary of common medical and insurance-related terms. Collectively, these documents must explain, in consumer-friendly terms, the benefits and coverage provided under each plan. This requirement was originally scheduled to be effective on March 23, 2012, but has since been delayed until final federal regulations are issued.

On August 22, 2011, the Department of Health and Human Services published a Notice of Proposed Rule Making that includes preliminary details on the requirements related to drafting and disseminating SBCs, as well as on the rules for providing existing plan members with advance notice of any material changes to plan terms. Below are some highlights of the Notice of Proposed Rule Making:

What is the purpose of the new requirement? Will the SBC replace policy documents or coverage certificates?
The SBC is a supplemental consumer-oriented summary of plan benefits and coverage terms. It is designed to provide clear, consistent, and comparable information to individuals about their health plan and the health insurance coverage that may be available to them. The SBC is not a replacement for a coverage certificate, policy, or contract.

What kind of information is included in the SBC?

Description of coverage for various categories of benefits
Any exceptions, reductions, or limitations on coverage
Any cost-sharing provisions, including deductible, coinsurance, and copayment obligations
Renewability and continuation of coverage provisions
Examples of how costs are distributed in common benefit scenarios (e.g., Coverage Examples)
Premium information
Uniform definitions of common insurance and medical terms
Statement of whether the plan meets "Minimum Essential Coverage" standards (applicable in 2014)
Other administrative information, including a contact number to call with questions, and information as to where members may obtain lists of network providers, any relevant drug formularies, and copies of the actual certificates, policies, or contracts for coverage

Where can I get more information?

Visit this link to read a Department of Health and Human Services discussion of the proposed SBC requirements.
View a sample copy of the SBC.
View a sample copy of the Uniform Glossary.

Click here to read more information about the Notice of Proposed Rule Making for the Uniform Summary of Benefits and Coverage requirement.

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The “Cadillac Tax” (2018)

Beginning in 2018 under the Affordable Care Act, an excise tax of 40 percent will be imposed on any “excess benefit” provided to employees enrolled in “high-cost” employer-sponsored coverage. Read on for common questions and answers about the proposed tax.

What is the stated purpose of the tax?
Proponents of the Cadillac Tax have explained that its purpose is to discourage very “rich” benefits, though some analysts suggest a secondary factor may be the anticipated increase in tax revenue that is likely to occur (some employers may seek to avoid the tax by decreasing their health benefits in favor of higher wages). Some analysts also suggest that not all coverage triggering the tax will be particularly “rich” (because of geographic and other market variation) and project that the number of plans owing tax may increase over time, because long-term cost trends will outpace the Cadillac Tax’s inflation-based adjustment factor.

Whom does it affect?
The Cadillac Tax applies to both fully insured and self-insured coverage, as well as state and federal governmental group health plans.

How will “excess benefits” be measured?
Plan benefits are measured by premiums, which include both employer and employee contributions — whether pre-tax or after-tax. Self-funded plans will measure premiums based on rules similar to existing COBRA premium calculation rules. Premium measurements are taken on a monthly basis and compared to 1/12 of the applicable annual dollar limit. The Cadillac Tax 2018 annual dollar limits are statutorily defined as:

$10,200 for self-only coverage

$27,500 for other (family, plus one, etc.) coverage (All coverage under a multi-employer plan is compared to the “other coverage” dollar limit.)

There is, however, a one-time dollar limit “catch-up” adjustment (for 2018) equal to the premium growth (from 2010 to 2018) of more than 55 percent in the Blue Cross Blue Shield Federal Employee Health Benefits Program (BCBS FEHBP) “standard benefit option.”

Who will calculate the tax?
Each employer must calculate its excess benefit, if any, and any applicable tax amount. For multi-employer plans, calculation is the responsibility of the plan sponsor.

Who must pay the tax?
Applicable taxes must be paid by the “coverage provider”: 1. for fully insured plans, the health insurance issuer; 2. for HSA and MSA contributions, the employer; 3. for other coverage (including self-funded), the plan administrator. Note: It is not explicitly clear whether the law is referring to “administrator” in the context of the group health plan or the plan TPA, though secondary sources generally indicate it is the former (i.e., the employer).

Other adjustments may be made to premium dollar limits, as follows:

Age and Gender
Employers with higher-cost coverage due to age and gender may have higher premium limits. Specifically, limits are adjusted by the excess (if any) of the BCBS FEHBP “standard benefit” premium as priced for the age and gender of a given employer’s employees, compared to the same benefit option as priced for the age and gender characteristics of the national workforce.

Retirees and High-Risk Professions
Dollar limits for retirees or employees in a high-risk profession are increased by $1,650 for self-only and $3,450 for other coverage.

After 2018
Dollar limits are adjusted for cost-of-living increases and rounded to the nearest multiple of $50.

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