Legislative

The Facts of the Month

Here is something to mention when discussing health trends in the month ahead.

Employees may not fully utilize available health benefits due to lack of awareness, benefit complexity, or mismatches with individual needs. To address this, many employers are shifting away from generic digital health guidance to embrace more personalized healthcare options for their employees. Nearly 69% of employers now offer personalized health and wellness programs, according to a RAND Employer Survey.

Source: RAND HEALTH QUARTERLY, https://www.rand.org/pubs/periodicals/health-quarterly/issues/v5/n2/07.html

The Big Three

Each month GPAHU identifies three top public policy or legal developments that could impact our members and clients. Here are this month’s big three!

1. Pennsylvania Insurance Department Announces Proposed 2025 Individual and Small Group Market Rates

The Pennsylvania Insurance Department (PID) recently published the premium rates individual and small group health insurance carriers submitted and the PID has reviewed for calendar year 2025. The PID is seeking comments from the public on these rates through September 2, 2024, which can be sent to ra-in-comments. Once the PID has received and reviewed all public input, they will issue final rates this fall, prior to open enrollment season.

Most insurers in the state have proposed about an 8 percent rate increase for the coming year, which is slightly below the national average. In the individual market, the statewide average increase requested is 7.9 percent. Small group carriers asked for 7.8 percent more on average. Details of each specific carrier’s requests can be found here.

The PID reviews all proposed rates by carriers for both financial adequacy and discrimination, and then works with each carrier on potential modifications before releasing the proposed premiums for public comment. When justifying this year’s rate increases, carriers cited the rising cost of medical care, including prescription drug prices, labor costs in the healthcare industry, and increased utilization of medical care services.

2. Updated Federal Penalties for Health Plan Violations

The federal Department of Health and Human Services just released updated penalty amounts for certain health plan violations that may occur on or after January 15, 2025. These penalty increases are separate from any penalty increases the federal Department of Labor may announce later this year for ERISA violations. As an example, the penalty for willful failure to provide an accurate SBC moved to $1,406 (up from $1,362) for each failure. The full list can be found here.

3. Recent Changes to Medicare May Affect “Creditability” Status of Employer-Sponsored Group Health Plans Moving Forward

Federal law requires all group health plans that offer prescription drug coverage to conduct an actuarial test on that coverage annually to determine how it stacks up against the average Medicare Part D prescription drug plan. Group prescription benefits that are equal to, or more generous than, the typical Part D plan are called “creditable” plans, while less generous coverage is deemed “non-creditable.” Until recently, most group prescription drug coverage was deemed to be “creditable,” but recent changes to Medicare prescription drug cost-sharing requirements, such as the cap on the cost of insulin and the $2000 out-of-pocket cost cap for Medicare prescription drugs will affect creditability testing moving forward. It is especially an issue for qualified high-deductible health plans with deductibles over $2000, since people in these plans must meet their deductibles first, for all expenses other than preventive care, and very few prescription drug expenses are considered preventive care.

While there is no requirement for group health plan sponsors to offer creditable prescription drug coverage, since so many employers have done so for a long time, they may be startled to learn benefits they have offered for many years are no longer deemed “creditable.” Also, if a group plan only offers “non-creditable” coverage options to employees, there will be a coverage impact on any Medicare-eligible plan participants.

If a Medicare-eligible person does not have other access to “creditable” prescription drug coverage, then they must enroll in a Medicare Part D plan or Medicare Advantage plan within 63 days or risk a lifetime cost penalty attached to their Medicare premiums. That is why all group health plans offering prescription drug coverage to Medicare beneficiaries must report the results their annual creditability test to the Centers for Medicare and Medicare Services (CMS) within the first 60 days of each plan year and send notices to all Medicare-eligible plan participants about the status of their plan. Medicare-eligible group plan participants need to know about any creditability status change in their coverage on timely basis to make responsible purchasing decisions moving forward.

So, what does this mean for NABIP members? First of all, being aware of the issue is critical. Brokers are on the front line when it comes to describing coverage changes and trends to employers’ clients and plan participants. You will need to be able to explain why some group’s prescription benefits are no longer “creditable” even though they might be the same, or even more generous, than coverage the employer offered in years past.

Finding out plan creditability status from all of the carriers you work with, as early as possible in the coverage process, is also crucial. Since creditability testing is a plan-specific actuarial calculation, carriers and PBMs should be the ones doing the testing and providing the information to each group on a timely basis. Some carrier partners have been reluctant to provide this information to groups in recent years, and have pushed groups to do their own “simple” actuarial tests, which CMS designates as a safe harbor. However, the resource provided by CMS for simple testing is years out-of-date and is not designed to work with . So, pushing to get the information from the source will be critical in the years ahead.

Finally, brokers need to be well-versed on options available to group plan clients, and the related compliance responsibilities. Employers are not required to offer a “creditable” prescription plan, but those who find out their benefits are “non-creditable” may want to consider offering multiple coverage options to employees and explaining the difference up-front. Also, if a Medicare-eligible plan participant loses access to creditable coverage, they qualify for a Medicare special enrollment period and must enroll in a Medicare prescription plan within 63 days. So, plans must alert any Medicare-eligible beneficiaries of any plan status change in a timely manner. All plans must notify all potentially Medicare-eligible beneficiaries about the status of their coverage in advance of the Medicare annual election period, which runs from October 15th-December 7th.

Check This Out!

If you want to expand your health policy knowledge beyond this newsletter, here is a resource to check out!

At www.reginfo.gov, you can access pending and final federal regulations, plus see the status of rules from the idea to finalization stages, and also look at what is upcoming on the federal regulatory agenda!

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