(HealthDay News) -- Red, itchy, teary or burning eyes can signal allergies, a condition that affects millions.
But what causes allergies? The American College of Allergy, Asthma, & Immunology mentions these possible triggers:
Pet danderDust mitesMoldPollen, with common sources such as weeds, trees and grass.While not allergens themselves, things like cigarette smoke, diesel exhaust or perfumes can worsen existing symptoms.-- Diana Kohnle 
Copyright © 2014 HealthDay. All rights reserved.
(HealthDay News) -- When the snow finally begins to melt and the weather starts turning warmer, the improving forecast offers great motivation to get moving.
The Weight Control Information Network offers these suggestions for warm weather exercise:
Jump in the pool and swim some laps.Stroll through the zoo, a museum or an aquarium.Talk a walk through the nearest farmer's market and pick up fresh fruits and vegetables.Start a neighborhood garden.At least twice weekly, lift weights and do some push-ups.On hot days, work out indoors to a DVD. Remember to drink plenty of water.-- Diana Kohnle
Copyright © 2014 HealthDay. All rights reserved.
By Amy NortonMONDAY, March 24, 2014 (HealthDay News) -- As the deadline looms for Americans to enroll in "Obamacare" this year, a new study finds that many people -- especially the uninsured and those with lower incomes -- know little about the new health care law, known as the Affordable Care Act.
Most significantly, researchers found, Americans show little understanding of the cornerstone of the reform -- the online marketplaces, or "exchanges," that have been set up to help people shop for an insurance plan, and find out if they're eligible for Medicaid or subsidies to help pay for their health insurance.
Overall, half of the 6,000 U.S. adults surveyed did not even know what an exchange was, and among the uninsured, a full 64 percent didn't know. In addition, over 40 percent of survey respondents did not know what an insurance deductible was, including nearly 60 percent of the uninsured.
Experts were concerned by the findings, reported in the March 24 online edition of the Proceedings of the National Academy of Sciences. But they were not shocked.
"No, this doesn't surprise me at all," said Dr. Kavita Patel, a fellow at the Washington, D.C.-based Brookings Institution.
Low "health literacy" -- people's understanding of health information and ability to use it -- is a well-known problem, and not limited to health care reform, noted Patel, who was not involved in the study.
To be fair, the new report is based on a survey done in August and September of last year -- before the state and federal exchanges were up and running, and before the troubled federal website was grabbing headlines everywhere.
By now, Americans may know more, according to Silvia Barcellos, an economist at the University of Southern California who led the study.
She said she and her colleagues are planning a follow-up survey in April to see if there has been a change.
Regardless, Barcellos said, the current findings are worrisome, especially the lack of awareness among the uninsured.
"These are the people everyone is counting on to enroll," she noted.
And the problems go beyond awareness of the exchanges. "Many people lack a basic understanding of how health insurance works," Barcellos said.
March 31 is the deadline for enrolling for insurance coverage for 2014 under the Affordable Care Act.
Of all survey respondents, 42 percent did not know what an insurance deductible was -- including 58 percent of the uninsured.
The same was true for 30 percent to 45 percent of those living between 100 percent and 400 percent of the federal poverty level. Many of those Americans are eligible for tax credits to help pay for insurance bought through the exchanges. They are another group that stands to benefit the most from the Affordable Care Act.
But if uninsured and lower-income people don't understand how health insurance works, Barcellos said, "how can you expect them to make informed decisions when they choose a plan?"
Sharon Long, of the Urban Institute's Health Policy Center in Washington, D.C., agreed.
"Health insurance is complicated, and we're talking about people who may never have had it in the past," said Long, who was not involved in the study. "It's ironic that we're asking people without that experience to make good choices."
Brookings' Patel pointed out that this problem was anticipated. Federal and state governments have so-called navigator programs to help applicants get through the enrollment process. Those navigators include individuals and groups -- from nonprofits to hospitals to church groups -- who are trained and certified (and paid) by the government.
"The role of the navigators is important," study author Barcellos said. But, she added, people also need to know the programs exist.
There are other potential ways to make the exchanges more user-friendly, according to Barcellos. One step, she said, could be to redesign the exchange websites to "nudge" people to the best plans -- by highlighting certain economical and better-quality plans on the first page of the site.
Barcellos said research has shown that when people have too many choices -- especially complex ones -- their tendency is to opt for whatever seems easiest.
"Or," she said, "they may make no choice at all."
RICHMOND, Va. - (Mealey's) The federal government argued before a panel of the Fourth Circuit U.S. Court of Appeals on May 10 that a district court judge erred in finding that the individual mandate contained in the Patient Protection and Affordable Care Act (PPACA) is unconstitutional, while the Commonwealth of Virginia urged the court to find that the individual mandate cannot be severed from the rest of the act, so the entire thing must be declared unconstitutional (Commonwealth of Virginia v. Kathleen Sebelius, Nos. 11-1057 & 11-1058, 4th Cir.).
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CINCINNATI -- (Mealey's) The individual mandate contained in the Patient Protection and Affordable Care Act (PPACA) is a valid exercise of Congress' power under the commerce clause of the U.S. Constitution, a Sixth Circuit U.S. Court of Appeals panel held June 29, (Thomas More Law Center, et al. v. Barack Hussein Obama, et al., No. 10-2388, 2011 U.S. App. LEXIS 13265, 6th Cir.), in affirming the dismissal of a case (Thomas More Law Ctr. v. Obama, 720 F. Supp. 2d 882, E.D. Mich. 2010) challenging the act.
After finding that plaintiffs Thomas More Law Center, Jann DeMars, John Ceci, Steven Hyder and Salina Hyder had standing to bring their suit challenging the PPACA against President Obama and other federal defendants, the court affirmed an order from the U.S. District Court for the Eastern District of Michigan dismissing the case.
The plaintiffs had challenged the PPACA, alleging that Congress lacked authority under the commerce clause to pass the PPACA and seeking a declaration that the individual mandate provision contained in the act is unconstitutional. The individual mandate requires most Americans to purchase health care insurance or pay a penalty, starting in 2014.
Set against the PPACA's broader statutory scheme, "the minimum coverage provision reveals itself as a regulation on the activity of participating in the national market for health care delivery, and specifically the activity of self-insuring for the cost of these services," Judge Boyce F. Martin Jr. wrote for the panel.
By regulating the practice of self-insuring for the cost of health care delivery, Judge Martin said that the minimum coverage provision is facially constitutional for two reasons: The provision regulates economic activity that Congress has a rational basis to believe has substantial effects on interstate commerce, and Congress has a rational basis to believe that the provision is essential to a larger economic scheme reforming the interstate markets of health care and health insurance.
"The minimum provision regulates activity that is decidedly economic," Judge Martin said.
The plaintiffs conceded that Congress has the power under the commerce clause to regulate the interstate markets in health care delivery and health insurance, and the PPACA uses this power to regulate prices and protect consumer by banning certain insurance industry practices that have prevented individuals from obtaining and maintaining insurance coverage, Judge Martin said.
Judge Jeffrey S. Sutton concurred in the judgment but wrote separately to deliver the court's opinion as to the government's taxing power. The government had argued that Congress had an independent authority under its taxing power to pass the individual mandate.
The individual mandate is a regulatory penalty, not a revenue-raising tax for reasons including that Congress called the sanction for failing to obtain medical insurance a "penalty," not a tax and that legislative findings in the PPACA show that Congress invoked its commerce power and not its taxing authority, Judge Sutton said, adding that Congress' taxing power cannot sustain the constitutionality of the mandate.
Also, that Congress placed responsibility for enforcing the penalty with the Internal Revenue Service does not make the minimum-coverage provision a tax because the IRS also enforces other regulatory penalties, Judge Sutton said. Additionally, the PPACA does not treat the mandate like a tax because it prohibits the IRS from using its most salient enforcement tools in collecting the penalty, he added.
Congress could have raised taxes on everyone in an amount equivalent to the current penalty, then offered credits to those with minimum essential insurance or imposed a lower tax rate on people with health insurance than those without, but Congress did not do these things, Judge Sutton said.
U.S. Judge James L. Graham of the Southern District of Ohio sitting by designation, concurred with the court's opinion on the taxing power of the government but wrote separately, saying he disagreed with the commerce clause analysis.
"Here, Congress's exercise of power intrudes on both the States and the people. It brings an end to state experimentation and overrides the expressed legislative will of several states that have guaranteed to their citizens the freedom to choose not to purchase health insurance," Judge Graham said.
[Editor's Note: Full coverage will be in the July 7 issue of Mealey's Managed Care Liability Report. In the meantime, the order is available at Mealey's Online Research Service or by calling the Customer Support Department at 1-800-833-9844. Document #31-110706-019Z. For all of your legal news needs, please visit Mealey's Legal News and Litigation Reports.]
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By Vanessa A. Scott and Carol A. Weiser, Sutherland Asbill & Brennan LLP
The Departments of Health and Human Services (HHS) and Treasury, respectively, have issued guidance on (1) the ability of individuals and small employers to purchase health insurance through an exchange, and (2) the premium tax credits for individuals who buy that coverage and whose income is between 100% and 400% of the federal poverty level (FPL). Click here for the HHS proposed regulations and here for the Treasury proposed regulations, which were published in the Federal Register on August 17, 2011.
This article focuses on the implications of these rules for "large" employers, i.e., generally, employers that employ an average of at least 50 full time employees. Though neither set of rules has a direct impact on large employers, they have some implications for the manner in which the so-called "employer shared responsibility" requirements will apply to large employers. In addition, the preamble to the proposed Treasury regulations includes several comments regarding rules that are expected to be included in forthcoming guidance on the employer shared responsibility rules and related rules.
Introduction
The Patient Protection and Affordable Care Act (PPACA) established an integrated set of rules that require uninsured Americans to obtain health coverage and provide mechanisms designed to make that coverage available and affordable.
Section 1501 of PPACA amended the Internal Revenue Code (Code) to add section 5000A implementing the individual mandate effective for taxable years after 2013. The individual mandate requires individual taxpayers to obtain health coverage that provides minimum essential coverage for themselves and their dependents or pay a penalty. (This provision of PPACA has been subject to a number of challenges in court alleging that it exceeds Congressional authority under the Constitution. With conflicting decisions having been reached in the Sixth Circuit Court of Appeals, which held the enactment of the individual mandate did not exceed Congressional authority, and the Eleventh Circuit, which held it did, it is likely that the Supreme Court will decide the constitutionality of this aspect of PPACA.)
Under section 1311, et seq. of PPACA, states may establish an insurance exchange by 2014. A state may elect to operate the exchange applying Federal standards set forth in PPACA, as further defined in HHS regulations, or adopt its own standards that comply with the requirements of PPACA. Section 1321 of PPACA gives HHS the authority to operate a federal exchange in any state that does not make an election to establish an exchange or that fails to meet certain conditions. The exchanges are to offer qualified health plans, as described in section 1301 of PPACA, which are to be issued by insurance carriers and are to cover essential health benefits in 10 categories with specified limits on cost-sharing for covered individuals. Specifically, the plans are to pay an average of at least 60% of the cost of covered services for bronze plans, 70% for silver plans, 80% for gold plans and 90% for platinum plans.
Code section 36B, which was added by section 1401 of PPACA, provides for a refundable premium tax credit to help individuals buy coverage in an exchange if they meet certain income and other requirements. The exchanges are to determine individuals' eligibility for the premium tax credits, and the tax credits generally are to be advanced by Treasury to the insurers who provide coverage to these individuals. The Treasury regulations proposed to implement these tax credits effective for taxable years after 2013 are discussed below.
Section 1402 of PPACA provides for certain reductions in cost-sharing under a qualified health plan for individuals whose income is between 100% and 400% of the FPL and who buy silver coverage through an exchange. Generally, using the FPL for 2011, this would include individuals whose annual gross income is between $22,350 and $89,400 for a family of four.
The shared responsibility provisions of Code section 4980H, which was added by section 1513 of PPACA, apply to large employers. Code section 4980H specifies that large employers that do not offer minimum essential health coverage to employees generally must pay a tax of up to $2,000 per full time employee if any employee enrolls in an exchange plan and the exchange certifies that the employee is eligible for the premium tax credit or reduced cost-sharing under section 1402 of PPACA. This section of the Code also provides that any large employer that offers health coverage that is unaffordable or does not provide minimum value must pay a tax of up to $3,000 per full time employee who elects coverage through an exchange and qualifies for a premium tax credit or reduced cost-sharing.
Phased Guidance on Exchanges
HHS and Treasury have been issuing guidance related to the exchange in phases. The guidance issued to date includes:
A request for comments on the development of standards for exchanges on August 3, 2010;Initial guidance to states on the establishment and operation of exchanges on November 18, 2010;A proposed regulation on the application, review and reporting processes for waivers from PPACA's exchange requirements for states implementing alternative comprehensive healthcare programs on March 14, 2011;Two sets of proposed regulations that set forth requirements for states that elect to establish exchanges, outline minimum requirements for participating issuers, outline standards for employers that elect to participate in the Small Business Health Options Program (SHOP), and describe health insurance premium stabilization policies in PPACA on July 15, 2011; andThree sets of proposed regulations on the premium tax credits (summarized below); the process of determining eligibility for enrollment in an exchange plan (also summarized below); and coverage under Medicaid, the Children's Health Insurance Program (CHIP) and state health coverage programs.Premium Tax Credits
The Congressional Budget Office estimates that, when PPACA is fully phased in, 20 million Americans will receive premium tax credits with an average subsidy of over $5,000 per year. The proposed Treasury regulations establish rules regarding the individuals eligible for a premium tax credit, the amount of the credit and the requirements for individuals who receive a credit to reconcile on their tax returns the credits received and the credits to which they are ultimately entitled. The regulations also require exchanges to report to covered individuals information on credits received on their behalf so that they will be able to complete the reconciliation on their tax returns.
Who Is Eligible? The general rule is that individuals can obtain a premium tax credit if they (1) buy coverage in an exchange, (2) have household income between 100% and 400% of the FPL for the family's size, (3) are not eligible for minimum essential coverage under another plan, other than in the individual insurance market, (4) may not be claimed as a dependent of another taxpayer, and (5) file a tax return, which must be a joint return if they are married. In addition, the individuals must be lawfully present in the U.S., which all citizens are, and not be in jail. The tax credit is generally not available to individuals whose household income is less than 100% of the FPL since those individuals are generally eligible for Medicaid.
Individuals Eligible for Minimum Essential Coverage Under an Employer Plan. As indicated above, individuals are not eligible for premium tax credits if they are eligible for minimum essential coverage under another plan, such as an employer-sponsored plan. The regulations provide that individuals are treated as eligible for an employer-sponsored group health plan providing minimum essential coverage only if (1) that coverage is both affordable and has at least a minimum value, or (2) the individual enrolls in the employer plan. The coverage is considered affordable only if the employee contribution for self-only coverage under the plan would be no more than 9.5% of the individual's household income, as further defined in the proposed rules. The rules clarify that this affordability test is always based on the employee premium for self-only coverage for employees and related individuals the employees are eligible to cover; the employee cost for family coverage is not used. A plan has a minimum value under these rules only if it covers 60% of the costs of medical care. An individual who becomes eligible for an employer plan that is determined by an exchange to be affordable and to have a minimum value but who chooses not to enroll in that plan during an applicable open enrollment or special enrollment period will generally be treated as eligible for that coverage (and, thus, not eligible for the premium tax credit) for the balance of the plan year. In contrast, an individual who becomes eligible for COBRA or other continuation coverage is treated as eligible for that coverage only if he or she chooses to enroll in it.
Exceptions to the Eligibility Rules. The proposed regulations include several exceptions to the general rule that are favorable to individuals seeking to benefit from the premium tax credit who might not qualify for a credit if the rules were strictly applied. Specifically:
If an exchange determines an employer plan is not affordable to an individual but his or her income changes so that the plan ultimately is affordable, the plan is treated as not being affordable for the year based on the exchange's initial determination.If an exchange determines an individual will meet the income rules but the individual's income ultimately is less than 100% of the FPL and the individual has gotten a premium tax credit, the individual is treated as eligible for the months for which the tax credit was provided.Because aliens are not eligible for Medicaid even if they are lawfully present in the U.S., a special rule provides that an alien who is lawfully present in the U.S. and whose income is less than 100% of the FPL is treated as eligible for the premium tax credit. Under the general rule, an individual's eligibility for minimum essential coverage is determined on the first day of the first full month of coverage. However, a special rule provides that an individual who becomes entitled to retroactive coverage (e.g., for Medicaid) is treated as eligible for that coverage only after approval so as not to cut off his or her eligibility for the premium tax credit retroactively.Calculating the Credit. The premium tax credit for an eligible individual and his or her family is determined on a monthly basis and is equal to the lesser of (1) the actual premium paid for coverage in the exchange, or (2) an adjusted premium for the second lowest cost silver plan available to the individual and his or her family (the benchmark plan) minus a percentage of his or her income, which represents the individual's required contribution for coverage. This percentage of income or required contribution is determined under a table in the proposed regulations that applies on a sliding scale based on the individual's income as a percentage of the FPL. For an individual whose income is 133% of the FPL, the required contribution is 2% of income; it is 9.5% of income for an individual at 400% of the FPL. The actual amount an individual pays for coverage will be less than that if he or she chooses a plan that is less costly than the benchmark plan.
Mechanics. The premium tax credit will be advanced to the insurer for the plan in which an individual has enrolled. The individual must complete a reconciliation on his or her tax return to determine the final amount of the premium tax credit to which he or she is entitled for the year. Unless one of the exceptions described above applies, if the reconciliation shows that an individual received greater tax credits than he or she should have, the individual will have to repay the excess, subject to certain caps based on percentages of the FPL. The regulations include a number of examples illustrating the calculation of the reconciliation if an individual's income increases or decreases, his or her family size changes or there are changes in his or her health coverage during the year. In addition, the rules address the impact of changes in filing status during the year as a result of marriage or divorce.
Implications for Large Employers. As noted above, though these rules have no direct impact on large employers, the rules have significant implications for employers, and the preamble to the proposed regulations includes several statements regarding positions Treasury currently intends to take on related rules in forthcoming guidance.
As discussed above, affordability of an employer plan for an employee and any related individual is tested on the basis of the employee contribution for self-only coverage, even if the contribution for family coverage exceeds the affordability threshold of 9.5% of income. This rule makes it less likely a plan will be considered unaffordable, which would subject the employer to the $3,000 shared responsibility tax. Although the affordability test for the premium tax credit is based on the cost of self-only coverage, the preamble says future regulations are expected to apply the similar affordability test for the individual mandate under Code section 5000A to an employee's family members based on the employee's required contributions for family coverage under the employer plan.In the preamble, it is noted that future regulations on the employer shared responsibility rules are expected to include a safe harbor under which employers can determine affordability of employee contributions under their plans based on employees' W-2 wages. This test of affordability is in contrast to the test based on household income on which eligibility for the premium tax credit is based. This alleviates employers' concerns as to how they would obtain information on employees' household incomes. The preamble also says IRS and Treasury intend to request comments on this safe harbor.In addition, the preamble says that regulations defining minimum essential coverage are expected to provide that an employer plan will not fail to be considered minimum essential coverage solely because it is self-insured.Regulations defining essential health benefits under section 1302 of PPACA are expected to be proposed later this year. The preamble indicates the regulations:are not expected to require either employer plans or health insurance in the large group market to provide each of the essential health benefits or even benefits in each of the 10 identified categories; andwill seek to foster the preservation of the current system under which health coverage is primarily provided by employer plans without allowing the employer responsibility standards under PPACA to be avoided.On a related note, the preamble says the agencies writing the regulations are considering whether employers need transition relief regarding the minimum value requirement.
Comments on the proposed Treasury regulations are due by October 31, 2011. Once they are final, the rules will be effective on January 1, 2014, the effective date for the exchanges.
Eligibility for Participation in, and Subsidies under, Exchanges
While the proposed Treasury rules address the tax credits for certain individuals purchasing coverage through an exchange, the HHS proposed regulations address eligibility for participation in, and subsidies under, the exchanges, as well as standards for small employer participation in SHOP, which provides access to exchange-based health plans to employers with up to 100 employees. The proposed rules say that future HHS guidance will address additional exchange-related issues, including exemptions from the individual mandate, benefits design standards for plans offered through the exchange (including the definition of essential health benefits), and quality standards for exchanges and issuers.
The proposed rules provide that, upon an individual's application to an exchange for coverage, the exchange will use a single, streamlined system to determine the individual's eligibility for (1) participation in the exchange, (2) any premium tax credit and discount programs, and (3) any state Medicaid or CHIP programs. The exchange will also take responsibility for enrolling the individual in the program(s) for which he or she is determined to be eligible to the extent permitted under state Medicaid or CHIP laws. In conjunction with these rules, HHS has also proposed simplified eligibility rules for Medicaid and CHIP that align the new Medicaid eligibility process with eligibility rules for premium tax credits and cost-sharing reductions under the exchanges based on an individual's modified adjusted gross income.
An individual seeking participation in an exchange must (1) be a citizen or be lawfully present in the United States, (2) not be incarcerated, and (3) meet certain residency standards for participation in an exchange program in the individual's "service area." Under the proposed rule, individuals will be eligible to participate in the exchange that covers the service area where they reside, intend to reside, or where the primary taxpayer resides (in the case of a spouse or a dependent). The proposed rules also outline the procedure for the acceptance of applications by the exchange, standards for making eligibility determinations and notifying individuals, and the process for providing advance payments of premium tax credits to eligible exchange participants. Under the regulations, the exchange will be responsible for notifying individuals of their eligibility status and will also notify state Medicaid or CHIP programs regarding individuals' eligibility for those programs. In addition, if an individual is determined to be eligible to receive premium tax credits or cost-sharing reductions because his or her employer's coverage is not affordable or does not have minimum value, the exchange will notify the employer. The preamble to the HHS regulations indicates that future guidance will include additional information on the content of this notice. Presumably that guidance will clarify how a determination of affordability of employer coverage by an exchange based on an individual's household income is to be coordinated with an employer's determination based on the employee's W-2 wages.
The proposed rules also provide for processes that will require exchanges to verify information needed to determine eligibility for exchange participation and for premium tax credits and cost-sharing reductions (i.e., citizenship status, income, eligibility for employer coverage, etc.) at least annually.
Finally, the regulations also propose standards for small employer participation in SHOP, including a provision that will allow employers that initially qualify for the program to continue to participate if the number of employees surpasses the 100-employee limit, provided the employer continues to meet other SHOP eligibility criteria. In addition, the proposed regulations include rules on certain notice and reporting requirements applicable to SHOP employers.
Comments on the proposed HHS rules are due by October 31, 2011. Once finalized, the rules will be effective on January 1, 2014, the effective date for the exchanges.
© 2011 Sutherland Asbill & Brennan LLP. All Rights Reserved. This communication is for general informational purposes only and is not intended to constitute legal advice or a recommended course of action in any given situation. This communication is not intended to be, and should not be, relied upon by the recipient in making decisions of a legal nature with respect to the issues discussed herein. The recipient is encouraged to consult independent counsel before making any decisions or taking any action concerning the matters in this communication. This communication does not create an attorney-client relationship between Sutherland and the recipient.
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A Virginia federal judge finds Viagra patents are valid and infringed, and the 7th Circuit holds in John Sullivan, et al. v. CUNA Mutual Insurance Society, et al., No. 10-1558, 7th Cir.; 2011 U.S. App. LEXIS 16413, that elimination of a retiree health benefit does not violate ERISA. Hear these and other stories from LexisNexis® Mealey's™ Publications. Copyright© 2011 LexisNexis, a division of Reed Elsevier Inc. For the latest litigation news headlines, visit www.lexisnexis.com/mealeys or www.lexisnexis.com/community.
A Pennsylvania federal judge finds the individual mandate in the Patient Protection and Affordable Care Act violates the Constitution, Goudy-Bachman v. United States HHS, 2011 U.S. Dist. LEXIS 102897 (M.D. Pa. Sept. 13, 2011), and, a California federal judge certifies a wage-and-hour class suing a refinery. Hear these and other stories from LexisNexis® Mealey'sTM Publications. Copyright© 2011 LexisNexis, a division of Reed Elsevier Inc. For the latest litigation news headlines, visit www.lexisnexis.com/mealeys or www.lexisnexis.com/community.
Lexis.com subscribers may also access the earlier decision of the court, and also the original complaint and initial motion to dismiss, in which the plaintiffs were found to have standing to challenge the PPACA in Goudy-Bachman v. United States HHS, 764 F. Supp. 2d 684 (M.D. Pa. 2011).
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By Alvin D. Lurie
Historical Headnote: Washington has been burned twice before - once 197 years ago literally, by the enemy from without, when the British burned the White House and the U.S. Capitol during the War of 1812; and once metaphorically, by the enemy from within, when the Confederacy broke away from those central institutions of the United States (indeed untied itself from the Union) in the civil war between the states. The following lines tell of the third time, right now, when those two bulwarks of our system have been subject to severe risk of conflagration figuratively in the overheated environment of the health care debate, and the third of our three constitutionally founded institutions, the Supreme Court, is about to be drawn into the same fire, from which it may become badly burned.
Season of Discontent
At a time when the dysfunction of Congress has triggered a mass disaffection of Americans with their government, which one might suppose could not possibly get worse, one could be wrong. We are rushing headlong into a season of potentially greater discontent - the period directly preceding the 2012 presidential election - when attacks on the incumbent and on those of the other party who are vying to unseat him will not just discredit all the rivals, but even the very institution of the presidency, which is certain to add a new dimension of disenchantment with our system of government in many quarters.
As if that were not enough, the third branch of our democracy, the judiciary, may be about to take its lumps alongside the other two, as the Supreme Court takes up a case that is at the core of much of the breakdown of comity among the working parts of our federal government that has exacerbated the low esteem in which the government is presently held by the public. In accepting the appeal in this case the Court has agreed to review the constitutionality of the health care reform legislation - the Affordable Care Act (so named more for public-relations effect than for truth in naming) - that is certain to cleave the High Court's judges into warring camps, that in itself will likely be seen to discredit its Justices, to say nothing of the Court itself, in the eyes of one or another of huge swaths of the public whose political persuasions are sharply at odds with whichever turns out to be the majority view of the Court.
Consequently, a further crumbling of the foundations on which the three pillars of our government sit is not a bridge too far. Do I prove too much? I can hear some readers declare so, especially as to the impact I have just foretold for the judiciary. To them I would say, remember Florida 2000 and the judgment of the Court's majority that Bush beat Gore for that state's Electoral College votes, resulting in the Democrat's supporters (not just the lay voters, but even some in academe) demonizing the majority for having "shamelessly" stolen the presidency from Gore, who, by every count, had won the popular vote. Do not think that didn't lessen the respect for and authority of the Court that echoes still in the view of many of that mind-set.
I would submit that the impending health care review by the Court could actually carry much more potential threat to the Court's authority than Gore versus Bush, when viewed from the perspective at this writing, i.e., before commencement of arguments before the High Bench, because of all the baggage already borne by the health reform issues, going back four years to the time Obama first raised the health reform banner on the campaign trail, and continuing with increasing intensity and animosity between the Parties in the Congress after the 2008 election, as the White House made the issue its signature (almost sole) legislative objective for all of 2009 and continuing into 2010, while the Republicans as steadfastly fought the effort at every turn.
Much of the battle then was galvanized around the fighting words "public plan option", building with escalating rancor and anger among the Members to what had seemed like irreconcilable differences between the D's and R's in both Houses of Congress (particularly in the Senate, where the Republicans, although a minority, held enough seats to maintain a filibuster). Suddenly, in March 2010, the Democratic strategists dropped the public option and devised an ingenious stratagem that finessed any possibility of a filibuster in the Senate, by breaking the legislation into two separate bills that passed in both Houses one week apart at the end of March; and so these two bills, with their overstuffed names - the first the "Patient Protection And Affordable Care Act" and the second the "Health Care And Education Reconciliation Act" - became the law.
The Beat Goes On
Was that a sweet victory for the President? History may show that he was the first casualty of his victory, and that his wounds of that struggle will continue to fester right up until his reelection bid in November. It certainly was not the end of the war between the Parties? Far from it. That became the rallying cry for the Republicans for the midterm elections in 2010, as they vowed to repeal the law if they won the Congress in the November elections; and there were increasing signs all through the polls taken in the Spring and Summer that their position resonated with increasing segments of the voters. There was, of course, also the little matter of a severe economic downturn, a mortgage crisis, and growing unemployment that played into the hands of the "outs". The election did indeed confirm the polls, as the Republicans won a smashing victory in the House and came within a couple of votes of capturing the Senate. That immediately led to triumphal announcements by the new Republican leadership in the House (Boehner) and the Ranking Minority Leader in the Senate (McConnell) that they would promptly introduce repeal legislation, and, further, bend their efforts to limiting Obama to a one-term presidency come the 2012 elections. Repealer bills were introduced in the immediate wake of the 2010 elections; but there is little evidence that much effort was put into their passage.
There was much evidence, however, of the scars of the reform battles and of the Obama-one-term strategy as the Congress turned to the then more pressing concerns of: (1) financial reform (that eventuated in passage of Dodd-Frank over strenuous Republican resistance); (2) raising the U.S. debt limit, which engendered a monumental donnybrook between the Parties, that went to the brink and led to just a short-term accord deep into the 11th hour (but not without a one-step downgrade of the Nation's credit rating by one of the three rating agencies, due in no small part to the apparent intransigence of both Parties in so crucial a matter); and (3) attempts to pass a budget bill that would greatly diminish the increasingly worrisome debt financing to which the U.S. has resorted, with each Party beating its predictable drum ("raise taxes on the rich," cried the D's; "cut spending," replied the R's). When neither side acceded one whit to the other's demands, that led to an agreement to establish a super Congressional committee equally divided between R's and D's from both Houses; but that too proceeded to reach the same deadlock as the full Congress, on essentially the same incompatible grounds, the pre-ordained consequence of deadlock being to default into a so-called "sequestering" of funds, that is, cutting the entire federal budget by an inflexible across-the-board percentage on every line of the expense budget, purportedly to achieve an arbitrary and inadequate debt reduction goal of $1.4 trillion over the next decade. All agree, even the super committeemen, that is totally insufficient, but each side blames the other. The title of a newly published book, "Throw Them All Out", neatly captures much of the public's view as to whom to blame.
Can anyone doubt that the seeds of this entirely indefensible way of running the finances of the most powerful nation in the world are to be found in the health care debates, that so poisoned the atmosphere in Washington. The President, now in full reelection mode, and borrowing a phrase from a previous Democratic warrior in the Oval Office, is going around the country decrying the "do-nothing" Congress (of course, only the Republican part of it), as if to obliterate the contribution his lack of effective leadership made to these bitter and partisan battles. If by so doing he hopes to forestall a resumption of the health care battle during the campaign, that is an idle hope.. Once the Republicans sort out their selection of his challenger, their designated standard bearer will sharpen his full sheath of arrows for doing battle with the President; and chief among that armory will most certainly be missiles directed at the Affordable Care Act.
Republican strategists certainly believe - and many objective observers agree - that passage of the health reform legislation by the Democratic-controlled Congress, over the vocal and vigorous opposition of the Republicans, was the factor that most fueled the fury of voters who in such convincing numbers supported Republican candidates in federal and state races in 2010. Can one suppose the GOP will retire that issue in the 2012 elections? Observe how Republicans have turned on even their own for evidencing partiality to Democratic initiatives. Is any better evidence required than the way the pack of Anyone-but-Romney presidential candidates has gone after Romney in the Republican debates - mainly for his identification with the Massachusetts law that is viewed as the precursor of the federal law - to know how central that issue is to the core of the Republican strategy for 2012.
Nor has Romney been the only target of the Republican rivals. No sooner did Gingrich emerge from his lagging position in the rear of that group than he was made to eat his words of praise for Romney's leadership on the Massachusetts health reform legislation when that law was working its way through the Bay State legislature, that, if not the only thing that caused the precipitous decline in Gingrich's poll numbers in the final days of the Iowa caucuses, was not an insignificant factor. The man from Massachusetts himself has been forced to distance himself from the legislation by arguing how far removed from Obamacare is the Massachusetts model - so far without visible success in effecting a Houdini-like escape. The closest he has come so far was in the December 10th debate in New Hampshire among the Republican hopefuls, when, responding to Perry's charge that he had attempted to cover up his support for the health care mandate by deleting a passage from the original printing of his book, "No Apology", Romney offered to bet Perry $10,000 that Perry's claim was false, which he has since characterized as just meant as "an outrageous number to answer an outrageous charge."
In a 2011 year-end tally of Obama's report card in dealing with the economy in the U.S. by a fairly large collection of economists, the majority of them rated him Fair or Poor, citing his focus on health care reform during his first year and a quarter in the presidency, at the expense of the economy. In a clear sign that the Administration is getting the message coming from so many sectors, it made really a quite shocking swerve to the right in its tactics regarding implementation of the health care law as enacted, by announcing in mid-December that it would not define a single, uniform set of standards of so-called essential health benefits that insurers throughout the country must provide in health insurance policies required under the federal law to be offered to policyholders, but rather leave it to the States to specify benefits within broad guidelines, thereby allowing significant variations among the States geared to their respective specific conditions within the several states.
The New York Times front-page headline for that story, coming as close to tabloid papers' colorful headlines jargon as the Gray Lady of the Press will allow its scribes, called it "WHITE HOUSE SURPRISE --Effort to Address G.O.P. Complaint." The story itself, with greater candor, acknowledged that --
[T]he Obama administration sought to deflect one of the most powerful arguments made by the Republican critics of President Obama's health care overhaul - that it was imposing a rigid, bureaucratic-controlled health system on Americans and threatening the quality of care. Opponents say that the federal government is forcing a one-size-fits-all standard for health insurance and usurping state authority to regulate the industry.
The article goes on to state that this criticism "helps explain why public opinion of the law remains deeply divided."
High Court In High Peril
With this overview of the impact of the health care struggles in the other branches of government that preceded the Supreme Court's agreeing to the grant of certiorari in the legal test of the health reform law, we can now return to consideration of the potential damage of the Court's ruling on the health care reform issue to the authority of the Supreme Court itself. Until the Affordable Care Act became law there was, of course, no role for the federal judiciary in respect of federal health reform, let alone for the Supreme Court as the court of last resort in this country, which in all but very rare instances takes a case only if it determines to exercise jurisdiction (the grant of certiorari), and only after determination in the trial court and decision by an appellate court on review of the trial judge. Its decision to grant certiorari in the pending case, entitled State of Florida v. U.S. Dept. of Health & Human Services, came only in the middle of November this year; after the question of legality of the federal health law had worked its way through at least 10 trial courts and four circuit courts in the past couple of years, albeit relatively below the radar screens of most Americans. Indeed, there was no evidence that this outbreak of litigation was even on the screens of Congress or the White House, that were too engaged in the battling within Capitol Hill, and between Congress and the White House, to pay attention to anything beyond their own turfs.
There was, however, one other large segment of government that was very much aware of and spurred to action by the federal reform act, i.e., governments in numerous State capitals, that attacked the law in court, both because the Affordable Care Act laid costly burdens on the States to fulfill obligations that the new law imposed on the States themselves, and because it mandated individuals to purchase and businesses to provide to their workers health insurance in every State. Consequently, shortly after enactment of the law in March 2010 cases were commenced by state attorneys general around the country, challenging the constitutionality of the law under the Commerce Clause, by reason of its imposing an unfair burden on commerce between the States. The Florida Attorney General appears to have been the first to institute suit, and his case became a magnet for many other state attorneys general who, in ensuing months, joined that litigation on behalf of their respective States, their numbers finally swelling to 25 in addition to the Florida plaintiff. That is the case in which the Supreme Court has now agreed to hear the appeal.
It is not the first case in which the High Court has had the opportunity to have its say on the law. There was an earlier case when it ducked the issue, declining to grant certiorari where a California judge had dismissed a challenge to the law on the ground that plaintiffs lacked standing to sue. But since that time a welter of judicial activity has broken out (as noted above, at least 14 decisions in district courts and circuit courts of appeals). The decisions run the gamut of possible outcomes, the principal issue relating to the constitutionality of the insurance mandate provided for in the Affordable Care Act (hereafter "ACA"). Of the four circuit court decisions, two sustained its constitutionality (6th Circuit and DC Circuit), one rejected it (11th Circuit), and one (4th Circuit) held the issue was not yet ripe for adjudication because of being barred by a federal anti-injunction statute that prevents a tax statute from being challenged before it takes effect (applicable at this stage because the insurance mandate will not come into force until 2014).
Cutting the Baby In Half or To Pieces?
Since the ACA in its thousands of pages provides an enormous number of rules directly impacting the provision of health care, the equally important legal question is whether the different parts of the law are severable, so that, were the mandate to be struck down, the rest of the law need not also be ruled unlawful, and, in that case, what parts can stand and what must fall. The question is moot for the courts which have sustained the constitutionality, the 6th and DC circuits, and for the 11th circuit (now on appeal in the Supreme Court) which ruled that the mandate, though unconstitutional, does not taint the balance of the ACA. Note, however, that the district court in the 11th circuit case, that had also ruled that the insurance mandate was not sustainable under the Commerce Clause, determined that requirement to be "so inextricably bound" to the other provisions of the law as to require invalidation of the entire statute. Although its reviewing appellate court did not sustain that part of the trial decision, the Supreme Court apparently intends to give considerable attention to that issue.
Surprisingly, the White House has been reported in the press to have made a comparable analysis of the interaction of the insurance requirement with at least two other central provisions of the ACA: one, forbidding insurance carriers to refuse to issue policies to certain applicants; and, two, barring carriers from taking preexisting conditions into account. The logic of that argument would lead to the Court's invalidating the entire statute, a result the Administration surely does not want. One may be permitted to speculate that the Administration has calculated this might be a scare tactic to dissuade the Court from striking down the insurance mandate and certain other requirements. It will be interesting to see whether this position makes its way into the Government's briefs. It is not to say that the argument lacks merit. In fact, other provisions can be pointed to as well where the question may fairly be asked whether Congress would have intended the challenged provision to be effective absent the individual or employer mandates. Some insiders have, in fact, reported that the mandates were an important part of the bait that the Administration offered to the insurance industry to buy off its opposition to the new law.
This severability issue could well become the most difficult issue for the High Court to resolve. The Solomonic answer - cut the baby in half - while preserving part of the law, may prove no less acceptable to the Supreme Court than it obviously really would have been to King Solomon as a disposition of the (probably apocryphal) case before him.
The Case Before the Court
The issues before the Supreme Court in the 11th circuit appeal can be assured of full development in the briefs and arguments of the parties and in the numerous amici briefs that will fill the Court's case files. But the Court will also have a wealth of other materials to draw upon. A large body of judicial learning on the ACA has accumulated in the 20 months that have elapsed between its enactment and the Court's announcement on November 14 to hear the Florida case, that is to be found in the opinions of the other district and circuit courts - not least a 37-page majority opinion and a 65-page dissent in Susan Seven-Sky v. Holder, decided by the D.C. Circuit Court of Appeals shortly after the grant of certiorari in Florida.
So it is doubtful that an issue relevant to the complete disposition of the questions that have arisen, or conceivably could arise, under ACA has not been vetted in this large body of work. That is far different than the state of the law when an unsuccessful effort had been made a year ago by the Virginia attorney general to obtain quick review by the Supreme Court of a case in which he had been only partially successful, by getting the district court sitting in Richmond, Virginia to strike down the ACA provisions mandating health insurance for employees of businesses and all other individuals (on the grounds of exceeding Congress' authority to regulate interstate commerce), but failing to convince the district judge to invalidate the rest of ACA. He thus sought to expedite review by the Supreme Court by means of a direct appeal to it, bypassing the circuit court - a procedure technically available but rarely granted. He pointed to the confusion in legal and government circles that would be engendered by the predictable proliferation of conflicting decisions in the courts. The Justice Department opposed, contending that arguments should be fully developed before the case was presented to the Justices of the Supreme Court for decision; and the Justices obviously concurred.
An Historic Event, An Historic Court
That desirable precondition to deliberation by the High Court - full airing of the issues in the lower courts - has now occurred. The Court itself has gone further. In announcing its decision to take the appeal of the Florida case; it has set up unusual special measures to assure that it receives maximum argument on the issues involved, not just those asserted in the applications for certiorari by the parties, but also other matters that the Court itself has signaled it intends to address in its consideration of the case. First, instead of the normal one hour of oral argument, equally divided between the parties, the Court has assigned a probably unprecedented three days for oral argument, and directed that 90 minutes thereof be devoted to severability and one hour to the Anti-Injunction Act. Even more unprecedented, it has appointed two lawyers not associated with the parties to make arguments by briefs and oral presentations, as friends of the court, one to speak to the severability issue, and one to argue for the position that the anti-injunction law prohibits legal challenge of the insurance mandate before 2014 when the penalty sanction for failing to obtain insurance kicks in under ACA.
The Court has done one other highly significant thing to set the stage for its determination of this case: with an eye on the fast approaching November elections, it has announced that it will hear oral arguments next March, with decision to be expected before July 4th, 2012 - an unusually rapid response. The decision would be important, perhaps monumental, whenever handed down, and could well seal the fate of the ACA. But coming in the very critical months before the election in November, it will take on historical significance, very possibly sealing the fate - in the election and in the history books - of the man for whom the term "Obamacare" was coined.
Moreover, the Court could not be unaware that, as noted already, its decision, whichever way it goes, will cast a long shadow over the regard in which its Justices are held by one large segment or another of their countrymen (depending on their respective points of view) - to say nothing of the Court's place in history, both that of the law and of the Nation. Their action gives new meaning to the term "without fear or favor".
It is not that the question of law at stake is likely to rank this decision with the many great ones of the Court - McCulloch v. Maryland, Marbury v. Madison, Dred Scott v. Sandford, Schechter v. U.S. - but that its determination will resolve a matter that has attracted so much heated dispute and that has split the Nation so deeply that, whichever way the Court rules, it will spark fury and contempt among maybe as much as 50 percent of the population (and, of course, a much higher percentage among discrete segments, e.g., the Occupy-Wall-Streeters, many of whom would, in a Wall Street minute, be torn between wiping the Supreme Court out of the Constitution entirely and pitching tents outside the Justices' chambers right down to Decision Day). That cannot be good for the authority and dignity of the Court. More importantly, widespread disrespect for the Supreme Court is not good for the Country.
...But Politics Can Overrule the Court
One might postulate that the Court's agreeing to resolve this issue that has so riven the body politic was especially problematic, inasmuch as the Court could understandably have avoided the matter at this time, given the proximity of the elections, since its decision might not even be the last word. Much will depend on the interaction of how the majority of the Court votes and how the public votes in the elections to follow in the immediate wake of the Court's decision. Indeed, the decision might even precipitate a reaction among blocks of voters sufficient to change the election outcome.
Most observers expect a 5-4 split in the Court, but are doubtful which group of Justices will comprise the 5. The common wisdom (probably less reliable in this instance even than it ever is) is that there are two easily predictable blocks of 4 - Breyer, Ginsburg, Kagan and Sotomayor in one camp, Alito, Roberts, Scalia and Thomas in the other - which makes Kennedy the man in the middle, whose predilection at this time is unknown, perhaps even to himself.
The other unknown is who will win the elections for president and for control of the two Houses of Congress. If the Democrats were to retain the presidency and their slim majority in the Senate, the Supreme Court decision might stand whichever way the majority of the Justices vote. That is almost foregone if the Court upholds the constitutionality of the ACA, or even all of ACA except the insurance mandate. But even were the Court to strike down the entire law, it is doubtful the Democrats would have the stomach to renew the health care war again in the next Term of Congress. Conversely, if the Republicans retain the House and win the Senate, and the Court were not to have stricken the law branch and root, or even if only the insurance mandate were stricken, one could expect a full-court press from the Republicans to attempt to repeal the portion of the law left standing, irrespective of whether Obama retained his office. (Indeed, Obama himself might be disinclined to buck the will of the Congress in order to retain some leverage in salvaging his legacy in his final years in office.) A more serious obstacle to the Republicans' success might be a Democratic filibuster in the Senate if the Republicans win the Upper House just barely, unless they could engineer a change in the Senate rules of the 112th Congress to accommodate their winning margin, thereby defanging the filibuster threat.
There is a further (albeit highly unlikely) imponderable in the mix: the possibility that Chief Justice Roberts will be able to achieve what few chiefs before him have accomplished in the Court, a unanimous decision on a deeply divisive issue from a philosophically divided bench, that will be supported not only by the entire Court but by a polarized Congress, with the overwhelming approval of the public, thus putting to rest this painful time in our history. That would be in keeping with the increasing war-weary mood in the Country, whether on foreign battlefields or in the chambers of the D.C. Capitol. That apart, like in so many wars this Country has been embroiled in for the past several decades that seem never to end, there comes a time when the fat lady has sung her last note. (Bucking the national unemployment statistics, fat sopranos may be in high demand for some time.)
Author's note: The input of Edward A. Zelinsky, professor of law at Benjamin N. Cardozo Law School, is acknowledged with much appreciation.
Copyright 2011, A.D. Lurie
Alvin D. Lurie is a practicing pension attorney. He was appointed as the first person to administer the ERISA program in the IRS National Office in Washington. He is general editor of Bender's Federal Income Taxation of Retirement Plans (LexisNexis), a 2-volume treatise, and he is also editor of the annual compendium of articles published under the title New York University Review of Employee Benefits and Executive Compensation (LexisNexis). Mr. Lurie is the first recipient of the Lifetime Employee Benefits Achievement Award sponsored by the Employee Benefits Committee of the American Bar Association Tax Section. He can be contacted at Alvin D. Lurie, P.C. in Larchmont, New York, at (914) 834-6725 or via email: allurie@optonline.net. He is also of counsel to The Wagner Law Group in Boston.
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By Carol Weiser and Vanessa Scott, Sutherland Asbill & Brennan LLPProposed regulations on, and a proposed template for, the Summary of Benefits and Coverage (SBC) required by section 2715 of the Public Health Service Act (PHSA), as added by the Patient Protection and Affordable Care Act (PPACA), are the latest guidance from the tri-agency task force[1] drafting PPACA rules for employer health plans. The proposed regulations, which were published in the Federal Register on August 22, 2011, address when, how and to whom the SBC must be distributed. The template for the SBC was also published in the August 22, 2011 Federal Register, along with a uniform glossary of health insurance and medical terms, instructions for completing the SBC and other related materials. Both documents include a number of requests for comments on the template, the related materials and the regulations, including the feasibility of complying with the SBC requirements beginning on or after March 23, 2012, the effective date specified in PPACA. These rules are applicable to both grandfathered and non-grandfathered health plans.BackgroundSection 2715 of PHSA provides that plans and health insurance issuers are to begin distributing SBCs beginning on March 23, 2012. The SBC requirements apply only to health plans or policies subject to the PHSA; excepted benefits, such as stand-alone vision and dental plans, are not required to issue an SBC. Insurers in the individual market must distribute SBCs to individuals. Insurers in the group market must distribute SBCs to plans or plan sponsors, as well as plan participants and beneficiaries. In addition, plans must distribute SBCs to participants and beneficiaries. PPACA directed HHS, DOL, Treasury and IRS to develop regulations implementing these rules in consultation with the National Association of Insurance Commissioners (NAIC). The NAIC convened a working group that included representatives of health insurance issuers, consumer advocacy groups, health care professionals and others that developed the template, uniform glossary and related materials that were published by the tri-agency task force. The preamble to the proposed regulations notes that the NAIC draft template is primarily for use by insurers and solicits comments on changes appropriate to accommodate plans or otherwise improve on the NAIC draft.Proposed RegulationsThe proposed regulations set forth the rules for distribution of the SBCs. The rules are proposed to be effective March 23, 2012, for grandfathered and non-grandfathered health plans and insurers in the individual and group markets.When to Provide SBCs. The proposed regulations provide similar rules for distributing SBCs to plans, individuals with health insurance and plan participants and beneficiaries.• A group health insurer must provide the SBC to a group health plan or the plan sponsor as soon as practicable after receiving a request for information about health insurance or an application for coverage, but no later than seven days after the request.° If the insurer sends the SBC when the plan or sponsor first requests information, potentially it must send another SBC when the plan later applies for coverage and again by the first day of coverage; however, the proposed regulations require new SBCs to be provided in each case only if there is a change in the information in the SBC after it was first provided.° A new SBC must be provided upon renewal or reissuance of the insurance, either by the date materials are distributed, if there is a written application for renewal, or 30 days before the beginning of the new policy year, if renewal is automatic.° An SBC must also be provided as soon as practicable upon request by the plan or plan sponsor, but no later than seven days after the request.• Generally, the same rules apply for health insurers to provide SBCs to individuals applying for and obtaining insurance, though information on policies reported to the Federal health reform web portal will be deemed provided to an individual who requests information before applying for coverage.° A special rule provides that an insurer may send one SBC to the policyholder for all covered individuals at the same address, and a separate SBC is required only for any other individual covered under the policy whose last known address is different than the last known address of the policyholder.° If the insurer makes a material modification to the policy that would affect the SBC, other than at the time of renewal, the insurer must notify covered individuals at least 60 days before the change takes effect.• The rules for providing SBCs to plan participants and beneficiaries are also similar. For an insured plan, both the insurer and the plan administrator are responsible for distributing the SBC, though timely and complete distribution by either one satisfies the requirement for both.° The SBC must be provided either with any written application materials or the first day a participant is eligible to enroll, if there are no written application materials.° If there are changes to the SBC before coverage becomes effective, a new SBC must be distributed by the first day of coverage.° Any special enrollee requesting coverage, for example, after the birth of a baby, must be given an SBC within seven days of the special enrollment request.° Upon renewal of coverage for a new plan year or otherwise, a new SBC is to be provided with written renewal application materials or, if there are no written materials, at least 30 days prior to the effective date of renewal. If a plan has multiple coverage options, the only SBC required to be provided automatically at renewal is the SBC for the option in which a participant is currently enrolled; however, the participant can request SBCs for other options for which he or she is eligible.° Also, an SBC must be provided as soon as practicable upon a participant’s or beneficiary’s request, but no later than seven days after the request.° One SBC can be provided for a participant and his or her dependents known to reside at the same address, but a separate SBC must be sent to a beneficiary whose last known address is different.° If the plan or an insurer makes a material modification to the coverage that would affect the SBC, other than at the time of renewal, the plan or the insurer must notify participants and beneficiaries at least 60 days before the change takes effect. Comments are requested on situations in which meeting this 60-day advance notice requirement might be difficult. How to Provide SBCs. The SBC must be in a uniform format following the prescribed template and may not exceed four double-sided pages or include print smaller than 12-point font. The proposed regulations say the SBC must be a stand-alone document, though the agencies request comments regarding including it in the Summary Plan Description for a health plan subject to ERISA or with other materials distributed by a plan.An SBC may always be sent on paper. An SBC being sent by an insurer to a plan or plan sponsor may be distributed electronically (e.g., via email or posting on the Internet) if three conditions are met:• The electronic format is readily accessible to the plan or sponsor;• A paper SBC is provided free of charge on request; and• If the SBC is posted, the insurer timely notifies the plan or sponsor by email or on paper that the SBC is posted and the Internet address where it can be found.Similar rules allow insurers to send SBCs electronically to individuals who request insurance information electronically or complete an application electronically. An SBC being sent to plan participants or beneficiaries of a plan subject to ERISA may be distributed electronically if the DOL rules for electronic disclosure are satisfied. As announced in April 2011, the DOL is currently reviewing its rules for electronic disclosure. If the DOL electronic disclosure rules are revised, any changes will automatically apply for this purpose.Content of SBC and Additional Rules. The proposed regulations include general descriptions of the contents of the SBC, which generally follow the provisions of section 2715 of PHSA. The template, discussed below, provides more detailed information on the required content. The contents of the uniform glossary and the instructions for the template are also discussed below.The SBC must be provided in a culturally and linguistically appropriate manner. According to the proposed regulations, this rule requires compliance with the similar rule under the recently revised external review regulations. Thus, in identified counties in which there are a significant number of, e.g., Hispanic-speaking residents, the SBC must include a statement in the appropriate language disclosing interpretive and translation services available. The agencies requested comments on whether and how translations of the SBC should be made available.Under the proposed regulations, plans and health insurance issuers are to make the uniform glossary available in paper or electronic form upon request, within seven days of the request. The SBC is to say that the glossary is available upon request. The electronic disclosure requirement is satisfied if participants are directed to a copy of the glossary posted on the plan or insurer website or the DOL or HHS website, though a paper copy must also be available upon request.The regulations say that any requirement under state law for insurers to provide a document like an SBC is preempted unless it requires more information to be provided.A plan or an insurer may incur a penalty of up to $1,000 for each willful failure to provide an SBC to an individual or a plan participant or beneficiary. A separate failure occurs for each covered individual, plan participant or beneficiary who does not receive an SBC.The Template and Related MaterialsIn conjunction with the proposed regulations, the tri-agency task force also issued proposed standards for the benefits and coverage information in the SBC and a draft uniform glossary of terms used in the SBC. By requiring coverage information in a standardized format, the SBC and the uniform glossary allow consumers and plan participants to make direct comparisons between the coverage available under different policies or coverage options. The proposed standards include, as appendices, a draft SBC template with coverage examples, instructions for completing the SBC, a sample completed SBC, a guide for completing the coverage examples that must be included in the SBC and a draft uniform glossary of coverage and medical terms used in the SBC. The agencies have requested comments on each of the draft documents, including suggested changes to the template for use with self-insured group health plans. Although the PHSA requires plans and insurers to include a statement in the SBC as to whether the plan or coverage provides minimum essential coverage that will satisfy the minimum value requirements of PPACA, this statement will not be required in SBCs prior to January 1, 2014, since the individual mandate and related rules are not effective until that date.Draft Template and Instructions. The general instructions for completing the template state that the SBC must be completed in good faith and must follow the format and order of the template and the charts almost exactly as provided, without significant variations in the font, order or format. In addition, plans are required to use plain language in the SBC and present the information in a “culturally and linguistically appropriate manner.” According to the SBC instructions, employer-sponsored group health plans must provide each participant with a pre-enrollment version of the template during initial or open enrollment, and a final version once the participant has selected his or her benefit options. The pre-enrollment version must describe each available coverage option, and the benefits, options, and costs for each available tier of coverage (i.e., single, single plus one, family, etc.). Once an employee selects an option and a coverage tier, the participant must receive a final SBC relevant to the selected coverage. It is somewhat unclear how this rule coordinates with the rule in the proposed regulations that says a new SBC must be provided on enrollment only if information in the original SBC changed.The draft template included in Appendix A of the guidance consists of a six-page document. The first page is a chart that details participant costs, including premium costs, out-of-pocket limits, deductibles, and any limits on coverage, including in-network provider requirements, annual and out-of-pocket limits, and excluded services. In addition to describing the costs and limitations associated with coverage, this page also contains language describing why each cost or limit is relevant in assessing the benefits offered under the plan, in a column labeled “Why this Matters.” The instructions for completing the SBC contemplate various benefits structures that may be available under a variety of plans and include very specific standard language for the “Why this Matters” column, depending on each plan’s benefit structure. The instructions state that the plan may not alter the suggested language, including generalized language explaining the impact of certain coverage limitations and cost-sharing requirements on participant coverage.The second and third pages of the template describe the significance of certain coverage terms (for example, co-payment, co-insurance, etc.), followed by a separate chart that discloses the participant costs for using a participating or non-participating provider for certain common medical events, including office visits, mental health treatment, prescription drugs, and urgent care coverage. While issuers and plans may not alter the explanation of the coverage terms, the SBC instructions indicate that any inaccuracies in the standard language may be explained in the chart. The sample completed template includes the dollar amount or percentage of any co-payments or co-insurance for each medical event for treatment received from a participating or a non-participating provider.Page four of the template lists services that are, and are not, covered by the plan, and a brief description of the insured’s continued coverage and appeals rights. The SBC instructions specifically designate 13 services that must be listed as covered or not covered, including chiropractic care, infertility treatment, and weight loss programs. While the plan or insurer must list any additional services not covered under the plan (even if designated as excluded elsewhere in the SBC), only the 13 payment of the cost for in-network services must be listed as not covered.Page five of the template provides coverage examples for three medical events – having a baby, “treating *** cancer,” and “managing diabetes” – along with sample provider costs for each service. All SBCs must include the same three coverage examples, with the same sample provider costs, and the examples cannot be altered by the issuer or the plan. The chart also contains sample care costs for individual items associated with each service. The plan or issuer must complete the chart by populating the sections describing any applicable deductibles, co-pays, co-insurance, and limits or exclusions based on the specific plan or option. Information regarding the sample costs and other standardized data needed to complete the coverage summary (i.e., date of service, provider type, etc.) will be provided by an HHS website and updated annually. Once the plan or insurer completes the coverage examples, consumers and participants will be able to compare the actual participant costs for the three sample services across different plans or options. The agencies have asked for comments on several aspects of these coverage examples, including whether other examples would be helpful, the cost of providing examples and whether multiple examples promote or hinder understanding and comparison of coverage.The final page of the template includes questions and answers about the coverage examples. These questions and answers explain much of the information regarding the sample care costs included in the coverage examples described above, and how the examples should be used to compare coverage options.Uniform Glossary. The uniform glossary, which must be included with the SBC, includes general definitions of medical and coverage terms used in the SBC that should apply across all plans. Plans and insurers cannot modify the uniform glossary. In addition to the standardized definitions of relevant terms, the uniform glossary contains diagrams to facilitate understanding of these terms. The agencies are considering whether to define additional terms and request comments on the definitions provided and whether additional terms should be defined.Comments RequestedComments on the proposed regulations, the template, and the uniform glossary are due by October 21, 2011. The preamble to the regulations includes several requests for comments on specific aspects of the proposed regulations, the template and the related materials, several of which are noted above. The regulations and the preamble say that, beginning on or after January 1, 2014, a statement as to whether a plan provides minimum essential coverage is to be included in an SBC. The preamble further indicates that the agencies are considering several reporting options under PPACA and other laws to minimize duplication and burdens on plans and employers, as well as individuals and insurance exchanges, with respect to reporting on whether coverage is minimum essential coverage.[1] The tri-agency task force consists of the Departments of Health and Human Services (HHS), Labor (DOL), Treasury and the Internal Revenue Service (IRS)._ _ _ _ _If you have any questions about this Legal Alert, please feel free to contact any of the attorneys listed below or the Sutherland attorney with whom you regularly work.Adam B. Cohen 202.383.0167 adam.cohen@sutherland.com
By R. Dean Conlin, Partner, Locke, Lord, Bissell & Liddell, L.P.
Small employers have struggled to have the same funding and plan design flexibility and uniform plan coverage for group health insurance as larger employers. A fully insured, multiple employer welfare arrangement ("MEWA") might suffice, but it relies on federal preemption of state insurance regulation. The Department of Labor's advisory opinions on this issue are analyzed and the current status of MEWAs is explored in this commentary by R. Dean Conlin.
A key provision of the Affordable Care Act is the requirement that individuals either purchase minimum essential health insurance or pay a penalty ("individual mandate"). This watershed requirement has been challenged as a violation of the federal Commerce Clause. Whether or not the ACA's individual mandate survives this challenge, large employers will likely continue to provide health insurance to their employees through self-funded plans that rely on the preemption of state insurance regulation by the Employee Retirement Income Security Act of 1974 ("ERISA"). This commentary first describes ERISA's preemption of state insurance regulation that would otherwise prevent large employers from being authorized to provide their employees with uniform plans of tailored health coverage.
The commentary next explains that small employers have long struggled to provide similar self-funded health plans. For the past decade, Congress has considered, but not passed, association health plan legislation that would permit small employers to group together through trade and professional associations, either to purchase health insurance from commercial insurers or to provide their own coverage through self-funding. At the present time, however, without any further Congressional action, a form of association or multiple employer health plan could be provided nationwide pursuant to ERISA.
This commentary carefully examines the fully insured, multiple employer welfare arrangement authorized by ERISA. While exploring the intersection of state and federal insurance regulation, the article dissects confusing opinions issued by the Department of Labor that effectively prevent small employers from utilizing a fully insured MEWA.
R. Dean Conlin, a partner with Locke, Lord, Bissell & Liddell, L.P., has more than 35 years' experience in a wide range of insurance regulatory, transactional and corporate matters for domestic and alien insurers and reinsurers. He has organized and represents alternative risk vehicles including risk retention groups, captives, intergovernmental cooperatives, and multi-employer pools. In addition, Mr. Conlin has focused on managed health care since the early stages of preferred provider networks. His clients include regulated insurers and alternative risk vehicles that provide managed health care coverage. His work for these clients, including preferred provider organizations, has ranged from product development to regulatory counseling.
Lexis.com subscribers can access the complete commentary, Health Insurance at the Intersection of State and Federal Regulation: Confused Regulation of ERISA Fully Insured MEWAs. Additional fees may be incurred. (approx. 39 pages)
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By Edward I. Leeds and Clifford J. Schoner
On February 17, 2012, the U.S. Department of Health and Human Services (HHS) released a set of FAQs concerning the Essential Health Benefits Bulletin it issued on December 16, 2011. The FAQs offer new guidance and raise new questions about the scope of what is considered an essential health benefit (EHB) for purposes of applying the prohibitions against annual and lifetime limits.
Background
Under the Affordable Care Act (ACA), the coverage offered by state health insurance exchanges and health insurance issuers in the individual and small group markets must include EHBs, except where grandfathered. The ACA also prohibits insurers and plans (even large, self-funded plans) from imposing annual and lifetime dollar limits on EHBs. The Bulletin established an approach for defining EHBs by reference to certain "benchmark" plans, which could vary from state to state. The Bulletin did not address the interaction between a state's identification of EHBs and the general prohibition against annual and lifetime dollar limits.
New Guidance/New Questions
In addition to clarifying various matters relevant to state insurance exchanges and insurance coverage in the individual and small group markets, the new FAQs start to consider some of the unanswered questions about the prohibition against dollar limits. While these answers provide clear guidance in some respects, they create uncertainties in others. For example, one FAQ makes it clear that health insurance issued in the small group market in a state where an employer has its primary place of business cannot apply lifetime and annual dollar limits to any benefits that are regarded as EHBs in that state (based on the applicable benchmark plan for that state). This guidance is helpful in the small group market, where an employer's principal place of business will typically match the state in which insurance is issued, but less helpful in identifying the benchmark plan in the larger group market where, for example, a group health plan may cover the employees of several related employers with principal places of business in different states.
With regard to insured plans, health insurers will need to make determinations as to the benefits that will be offered. It appears as if an employer with a self-funded plan will need to sift through a number of different available options to determine which plan will serve as its benchmark for EHBs. The employer will need to address a number of issues, which might include state benefit mandates, the requirement to offer pediatric dental and vision coverage and coverage for habilitation services, and the possibility of diverting from the benchmark plan by providing actuarial equivalent coverage for a particular type of benefit.
Further Guidance
Group health plan sponsors may expect further guidance on this subject. Data is currently being collected to identify the potential benchmark plans that will be available for 2014 and 2015. In the interim, at least until final regulations are issued, employers should keep in mind the government's "good faith" enforcement position that applies to reasonable efforts to identify EHBs.
As the federal health care reform effort gained steam, Ballard Spahr attorneys launched the Health Care Reform Initiative to monitor and analyze legislative developments. With federal health care reform now a reality, our attorneys are helping health care entities and employers understand the relevant changes and plan for the future.
For more information on the EHB requirements or any aspect of the ACA, please contact Edward I. Leeds at 215.864.8419 or leeds@ballardspahr.com, Clifford J. Schoner at 215.864.8626 or schonerc@ballardspahr.com, or the health care reform team member with whom you work.
Copyright © 2012 by Ballard Spahr LLP.
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This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.
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Liberty University petitions the Supreme Court over dismissal of a health care reform case, and defendants in a Propofol infection case in Nevada are ordered to pay $162.5 million in punitive damages. Hear these and other stories from LexisNexis® Mealey's Publications. Copyright © 2011 LexisNexis, a division of Reed Elsevier Inc. For the latest litigation news headlines, visit www.lexisnexis.com/mealeys or www.lexisnexis.com/communities.
A Christian school on Oct. 10 filed a petition for certiorari with the U.S. Supreme Court, seeking review of a divided lower court decision that held that the Anti-Injunction Act (AIA) stripped the court of jurisdiction to hear a challenge to the Patient Protection and Affordable Care Act (PPACA) (Liberty University, et al. v. Timothy Geithner, et al., W.D. Va.).
On Nov. 30, the U.S. District Court for the Western District of Virginia, Liberty Univ., Inc. v. Geithner, 753 F. Supp. 2d 611 (W.D. Va. 2010), dismissed a challenge to the PPACA brought by Liberty University Inc., Martha A. Neal, Michele G. Wadell, Dr. David Stein, Pausanias Alexander, Mary T. Bendorf, Joanne V. Merrill, Kathy Byron and Jeff Helgeson against U.S. Treasury Secretary Timothy Geithner, Health and Human Services Secretary Kathleen Sebelius, Secretary of Labor Hilda L. Solis and U.S. Attorney General Eric Holder, finding that Congress acted within its constitutionally delegated powers under the commerce clause when it passed the employer and individual mandates contained in the PPACA.
In a divided opinion, Liberty Univ., Inc. v. Geithner, 2011 U.S. App. LEXIS 18618 (4th Cir. Va. Sept. 8, 2011), the majority of a Fourth Circuit U.S. Court of Appeals panel on Sept. 8 held that the AIA strips the court of jurisdiction to hear Liberty University's challenge to the PPACA and remanded the case with instructions to dismiss the case for lack of jurisdiction. The dissenting judge said he would affirm the lower court's decision that Congress acted within its powers in passing the challenged provisions of the act.
On March 12, 2012, the U.S. Department of Health and Human Services (HHS) released the long-anticipated Final Rule and Interim Final Rules (the "Rules") on the Patient Protection and Affordable Care Act's (ACA) state health insurance exchanges ("Exchange(s)"), a key element of President Obama's healthcare reform plan. Set to go into effect on January 1, 2014, the goals of the Exchanges are to enhance competition, improve availability of affordable health insurance options and allow small businesses the same purchasing power that large businesses currently enjoy. As described in the Rules, the Exchanges will operate as competitive marketplaces, allowing individual consumers and small businesses to directly compare pricing and quality of health insurance options, among other factors.
The Final Rule incorporates two proposed rules originally published in mid-2011 that together implement what HHS refers to as the Exchange establishment and eligibility rules that address the eligibility, enrollment and plan function of the Exchanges. Affording substantial discretion to states in the design and operation of the Exchanges, the Final Rule details minimum federal standards for the establishment and operation of the Exchanges, minimum standards that health insurers must meet in order to participate in the Exchange and offer a qualified health plan, and standards of participation for the Small Business Health Options Program.
Additionally, several of the Rules are being published as Interim Final Rules, and HHS is requesting public comment relating to:
1. The ability of a state to permit agents and brokers to assist qualified individuals in applying for advance payments of the premium tax credit and cost-sharing reductions for qualified health plans;
2. Medicaid and CHIP regulations;
3. Options for conducting eligibility determinations;
4. Eligibility standards for cost-sharing reductions;
5. Timeliness standards for Exchange eligibility determinations;
6. Verification for applicants with special circumstances;
7. Timeliness standards for the transmission of information for the administration of advance payments of the premium tax credit and cost-sharing reductions; and
8. Agreements between agencies administering insurance affordability programs.
All public comments must be received by 5 p.m., 45 days from the date the Interim Final Rules are published in the Federal Register, which is currently set for March 27, 2012. The Final Rule will go into effect 60 days from that date. The full preliminary regulatory impact analysis of the Rules may be accessed at Preliminary Regulatory Impact Analysis.
HHS will be publishing separate rules on the ACA's provisions on certificates of exemption from the individual responsibility policy and payment; the definitions of essential health benefits, actuarial value and benefit design standards; and quality standards for the Exchanges and qualified health plans.
For Further Information
If you have any questions about this Alert, please contact Mitchell Goldman, Melissa S. Snyder, Elinor L. Hart, any member of the Health Law Practice Group or the attorney in the firm with whom you are regularly in contact.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, or should be construed, as legal advice. For more information, please see the firm's full disclaimer.
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