Learning Objective 6 Flashcards

Question

Administrative functions that health benefit exchanges must provide [Card 269]

Answer 1

Acronym - Rescue the Consumer (RESQ C) Plans meet the REQUIREMENTS of the HBE ELIGIBILITY determinations STANDARD benefit formats - easy to follow QUALITY ratings for every plan CERTIFICATION of exemption from individual mandate

Answer 2

Acronym - SPA BC of VG CRAMPS SHOULD the state even set up a HBE? Or use federal? PARTICIPATION? ANTISELECTION issues - risk adjustment BASIC HEALTH PLAN - If < 200% FPL, not on exchange CARRIERS - are they required to join? VALUE-ADDED services - enhance online comparison tool or collect subsidy/premium for distribution GOVERNMENT structure - part of DOI? Independent? CARRIERS - how does the HBE pick who they want? Open Market or Active Purchaser? REGIONAL exchange? Or in state? ADMIN expense funding - how? taxes? carriers/provider? MERGED MARKET? - combine SG and indiv risk pool? PARTIAL CRED - 51 to 100 on HBE? By 2016 STANDARD benefits at each tier? - kills competitive nature of the market and innovation

Answer 3

Acronym - OSSA OPEN market - anyone who meets requirements SETTING STANDARDS - additional standards for QHPs SELECTIVE contracting - based on comparative value ACTIVE purchaser - negotiate premiums with insurer

Answer 4

ERISA, COBRA, HIPAA, ACA ERISA - Employee Retirement Income Security Act 1974 a. Requires disclosure of financial info concerning plan b. Sets fiduciary standards and code of conduct c. Ensures claim disputes resolved in a timely fashion COBRA - Consolidated Omnibus Budget Reconciliation Act 1985 a. Gives employee ability to continue coverage after leaving employment b. 18 months after terminations c. 102% of premium HIPAA - Health Insurance Portability and Accountability Act 1996 a. Can only exclude conditions treated in the last 6 mo b. Exclusions can only last 12 months c. ACA amended excl for < 19 in 2010, and all in 2014 d. Cannot rate based on: health status, medical condition, claims experience, medical history, disability ACA - Affordable Care Act a. Amended HIPAA b. Requires employers to provide adequate and affordable coverage for their employees

Answer 5

HEALTH - medical, dental, vision, Rx a. Employer gets a tax deduction for expenses b. Individuals only get federal tax deduction c. Same for FI and ASC plans d. No limits on the amount of tax-favored benefits e. Benefit value for employee and dependents are free from income and employment taxes GROUP TERM LIFE a. Similar to health insurance - deduction for expenses b. Tax free coverage is limited to $50,000 benefit c. Tax-favored status doesn't extend to dependents d. Benefit value for employee (but NOT dependents) are free from income and employment taxes DISABILITY a. Employer's expenses are deductible as paid b. If value of coverage is taxed, proceeds paid to disabled individuals are NOT c. If value of coverage is NOT taxed, then proceeds are taxable LTC a. Proceeds under qualified plans are deemed to be health insurance and have same tax treatment

Answer 6

Acronym - No AIR I C ALLOWABLE RATING FACTORS a. Not subject to premium range limitation tests below INDEX RATE a. Average the highest and lowest premium rates b. AFTER rates have been adjusted for allowable rating factors and benefit design variations (normalized) RATE INCREASE LIMIT = sum of: a. % change in new business rate from prior to current b. 15% annually for experience c. Adjustments for change in coverage ``` INTRA-CLASS RESTRICTIONS a. Rates within a class cannot vary by more than 25% of index rate ``` ``` CLASS RESTRICTIONS (2 diff classes) a. Rating differential between lowest and highest classes cannot be by more than 20% ```

Answer 7

``` Age Gender Area Group Size - max 20% from highest to lowest Family composition Industry - 15% from highest to lowest Other - if given approval ```

Answer 8

Acronym - The Actuarial CLUMPS All group level data - rates, size, eff date, benefit changes ``` Claims data Loss Ratio reporting UW details Marketing materials Policy forms used SG rate manuals (current and prior period) ```

Answer 9

Acronym - What the ECK! Must pass ALL 3 tests, otherwise key employees are taxed on the value of their benefits ELIGIBILITY TEST a. Length of service test - no employee is required to complete 3+ years of employment to be eligible b. Uniform eligibility requirements c. Does the plan discriminate in favor of higher salaries CONTRIBUTIONS & BENEFITS TEST a. Mathematical testing with respect to benefit levels b. Selection of benefits must not be chosen by all highly compensated people KEY EMPLOYEE CONCENTRATION TEST a. Nontaxable benefits for key employees cannot exceed 25% of aggregate benefits for all employees b. Key = $160k+ salary, 5% owner, 1% owner & $150k

Answer 10

Advantages a. Benefits are not taxable b. Benefits are a substitute for taxable wages Disadvantages a. No carryover of funds b. Many qualification rules c. Elect benefits at beginning of year d. May not discriminate in favor of highly paid indiv

Answer 11

ACA amendment to allow small groups 2-100 to establish "Simple Cafeteria Plans" Must have specific eligibility and contribution requirements, and in return is exempt from testing More stringent eligibility requirements than regular cafeteria plans a. includes all employees with 1000+ hours of service in preceding year Specific employer contributions requirements Lower admin costs

Answer 12

Acronym - Special Health State Funds (SHS) Solvency Funds a. separate fund for health insurance to cover insurer insolvencies High Risk Pools a. Cover high risk individuals who can't get past UW b. Charge a premium, but it's inadequate so carriers pick up the rest Small Group Pools a. required to offer 2 plans (basic and standard) on a guaranteed basis to individuals who were rejected for other coverage

Answer 13

Actuarial Value - average share of medical spending paid for by the plan Actuarially equivalent - same AVs Comparative effectiveness research - compares new treatments and technologies to what currently exists Guaranteed issue - provide coverage regardless of health status High-Risk pools - provide subsidized coverage for individuals who have pre-existing conditions and have been uninsured for 6 months Individual Mandate - all individuals are required to have health care coverage Pay for Performance - incentive programs to reward providers for hitting metrics (quality, safety, efficiency) Premium rating rules/factors - Age (3:1), Tobacco (1.5:1), Family size and Geography Reinsurance - reimburses insurers for high cost individuals (retirees 55-64 until 2014, SG/Ind first 3 yrs) Risk Adjustment - tool to adjust payments between health plans to compensate insurers with a riskier pool Risk Corridor - Limits downside and upside for individual and small group pricing a. Plan gets money from govt if > 103% target alloweds b. Plan pays money to govt if < 97% target alloweds Risk Based Capital - amount of capital that a company needs to support operations based on assumed risk Risk Pooling - large groups of individuals or employers whose costs are combined to calculate premiums Value based insurance design - varies cost sharing to encourage services with clinical benefits and discourage those with little or no evidence of a benefit

Answer 14

Tax penalty is the greater of: 1. A dollar amount ($95 in 2014, $325 in 2015, $695 in 2016, and indexed after that) 2. A percentage of taxable income (1% in 2014, 2% in 2015, 2.5% in 2016 and beyond)

Answer 15

Reinsurance - 2014 to 2016 - reimburses insurers for high cost individuals (retirees 55-64 until 2014, SG/Ind first 3 yrs) Risk Adjustment - PERMANENT - tool to adjust payments between health plans to compensate insurers with a riskier pool Risk Corridor - 2014 to 2016 - Limits downside and upside for individual and small group pricing since there is no data on many uninsureds a. Plan gets money from govt if > 103% target alloweds b. Plan pays money to govt if < 97% target alloweds c. Govt bears 50% of spending between 3% and 8% d. 80% beyond 8% of target

Answer 16

ASOP #8 - To provide guidance regarding preparation and review of regulatory filings for health insurers Acronym - LC PRANCER BIRD Know the LAWS Review all CALCULATIONS State the PURPOSE of the filing Be familiar with RATING FACTORS Decide what ASSUMPTIONS are needed Consider how to handle NEW PLANS CAPITAL/SURPLUS projections should account for future actions that will impact either EXPERIENCE data needs to be properly adjusted Assumptions must be REASONABLE Make sure you are being consistent with BUSINESS plan Reliance on INFO from others - use ASOP #23 Projections to compare to REGULATORY BENCHMARKS should be based on available information (LR requirements, are rates excessive? Are they discriminatory?) DOCUMENTATION

Answer 17

Acronym - RPM PIT Crew RPM RETENTIONS PREMIUM LEVELS - now and future MARGIN PAD levels INVESTMENT EARNINGS TRENDS - morbidity, mortality, lapsation COST TRENDS REINSURANCE impact PROVIDER contracting changes MEMBERSHIP changes after increase

Answer 18

Acronym - MC PC CREPT PASS BED MEDICAL practice COST CONTAINMENT procedures POLICY conditions CLAIMS ``` CATASTROPHIC CLAIMS REGULATIONS EXPENSES PREMIUMS TAXES ``` PROVIDER contracts ADMIN procedures SEASONALITY SELECTION of risks BUSINESS operations ECONOMIC conditions DEMOGRAPHICS

Answer 19

ASOP #26 - Guides the preparer for actuarial certification by identifying the issues to be addressed and the required documentation All of this is to ensure COMPLIANCE What has been reviewed? 1. Description of rating methods 2. Plan contracts and certificates 3. Sales brochures 4. Rating Manual 5. Formulas 6. Test calculations 7. Description of contract changes 8. Fees Demonstrate how the rates are compliant with an example Document all the underlying assumptions to demonstrate compliance

Answer 20

Acronym - Matt PRATER ``` PRACTICES covered REGULATORY compliance ACTION ITEMS if not compliant TIME PERIOD covered EVENTS that may change things RATING METHODOLOGY changes ```

Answer 21

ASOP #41 - Communications that include an actuarial opinion Acronym - C U DISPLACD CAUTIONS about risk or uncertainty Intended USERS of this report ``` DATA DATE - through when? INFORMATION that was relied on, but not yours SUBSEQUENT events that could have an impact PURPOSE of the assignment LIMITATIONS of use with findings ACKNOWLEDGEMENT of your qualifications CONFLICTS of interest DOCUMENTS for distribution ```

Answer 22

Who did what?? a. Identify the responsible parties for all assumptions If prescribed by LAW, then disclose the law and if you are in accordance with it If by another USER, then you have three options: 1. If you agree with it - do nothing 2. If you disagree with it - disclose that fact 3. If you are not able to judge - disclose that