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December 28, 2013

More health care changes kicking in

WASHINGTON, D.C. — WASHINGTON — While the expansion of health insurance starting on Jan. 1 is the focus of much attention, there are plenty of other changes to the health-care system sprinkled throughout the Affordable Care Act’s many, many pages. Here’s a look at some of the less-known health law provisions coming into effect with the start of the new year.

1) Wellness programs can grow. A lot. Beginning in January, the health-care law allows employers to tether as much as 50 percent of workers’ insurance costs to their participation in wellness programs. These can range, for example, from a reduced deductible for taking a health assessment to rewards for meeting a certain target weight or cholesterol level.

Right now, the federal government limits the amount of cost-sharing that can ride on wellness programs to 20 percent. In 2014, that number will rise to 30 percent for general wellness programs — and 50 percent for participation in programs that aim to reduce tobacco use.

The whole idea of workplace wellness programs is to give workers a financial incentive to improve their health — or at least take certain preventive-care steps they might otherwise skip. At the same time, consumer advocates worry about the possibility of discrimination against less-healthy workers, who are unable to meet certain targets. In response, the Labor Department (which regulates large employer-based insurance plans) issued final rules in June requiring companies to give those whose medical conditions “make it unreasonably difficult” to qualify for the cost reduction an “alternative means of qualifying for the reward.”

“It remains to be seen if this approach raises new challenges for individuals and their doctors in personalizing an individual’s reasonable alternative standard and documenting and monitoring their progress toward the goal,” JoAnn Volk, a research professor and project director at the Georgetown University Health Policy Institute, wrote on the rule.

2) A tax on health insurance kicks in. Despite their best lobbying efforts, the health insurance industry was not able to repeal an industry-wide tax that helps finance the Affordable Care Act. Health insurers who bring in more than $25 million in premium revenue annually will be subject to a new tax meant to generate $8 billion in revenue in 2014. The size of the tax will vary on an insurer-to-insurer basis, depending on how big they are (i.e., how much premium revenue they bring in). This means that, beginning this year, health insurers must report their net premiums to the Treasury Department, which administers the fee. Insurers argue that this fee will get passed on to consumers, in the form of higher premiums.

3) Medicare Advantage plans must spend 85 percent of premiums on health care. Way back in 2010, one of the first things the health-care law required was that insurers spend the vast majority — 80 percent — of subscriber premiums on actual medical costs, as opposed to profits and administrative activities. Beginning in 2014, a similar requirement applies to Medicare Advantage, where private companies provide benefits to seniors. Beginning next year, these insurance plans must spend at least 85 percent of premiums on health care.

 

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