In the American Rescue Plan Act (ARPA), which was signed into law by President Biden on March 11, 2021, there are several provisions for healthcare plans, including a 100% subsidy of coverage premiums for eligible COBRA enrollees. The subsidies, which will run from April 1, 2021 through September 30, 2021, will be paid to employers by the federal government as payroll tax credits.
The subsidy will last for six months at most, ending on the earlier of the individual’s maximum period of COBRA coverage (generally 18 months) or September 30, 2021. Subsidies will also end early for individuals who become eligible for coverage under another group health plan or Medicare. Those employees who terminate employment voluntarily are not eligible for the subsidy.
Notices are Required
Employers should talk with their TPA about notice requirements and to determine who may be eligible for the subsidy. As a result of the eligibility period running through April, 2021, a list must be compiled including individuals who terminated employment as far back as November of 2019. A Notice of Assistance must be provided to individuals who become eligible to elect COBRA coverage between April 1 and September 30, 2021. Eligible workers who haven’t elected COBRA by April 1 and those who elected COBRA but then discontinued it must also be notified, since former employees have an extended election period running for 60 days after April 1, 2021.
Finally, a Notice of Expiration must be provided between 45 and 15 days prior to the subsidy expiring, unless the subsidy is expiring because the individual has become eligible for coverage by another group health plan or Medicare. The DOL is expected to issue new model COBRA forms within 30 days of the March 11, 2021 enactment date. In addition, individuals are required to notify the group health plan if they forfeit eligibility because they have become eligible for another group health plan or Medicare.
Two final rules related to the President’s promise to lower the cost of prescription drugs were recently announced by President Donald Trump. The first, known as the “most favored nation” rule, would lower the price of 50 Medicare Part B drugs to those paid by other wealthy countries. This pricing would apply only to Medicare beneficiaries. The second rule, intended to simplify drug pricing and pass available discounts to consumers, would eliminate the rebates drug manufacturers currently pay to Pharmacy Benefit Managers (PBMs) on higher priced brand name prescription drugs. Interestingly, in another recent action, drug manufacturers filed a lawsuit to stop the Trump administration from allowing states to import certain prescription drugs. Their suits argue that the last-minute steps by the President would expose the public to safety risks while not achieving any significant economic advantages for the public.
It’s doubtful that many technology companies are concerned about employees nearing age 65. Other employers, however, may want to brush up on Medicare eligibility in order to help older workers understand their options and avoid any potential gap in coverage. Here are just a few Medicare-related concerns:
For employees who will lose access to employer-sponsored group health coverage at age 65 or who choose to sign up for Medicare upon becoming eligible, the Initial Enrollment Period (IEP) is 3 months before to 3 months after the month they turn 65.
Medicare-eligible workers who leave employment with a retiree health plan or COBRA coverage are classified as “former workers” and therefore need to enroll in Medicare during their IEP.
Employees who have enrolled in Social Security before their 65th birthday will automatically be enrolled in Medicare Parts A and B. In order to avoid paying for 2 health plans, they may need to inform the Social Security Administration that they do not want Medicare Part B at this time.
Finally, for companies with fewer than 20 employees, Medicare becomes primary coverage. Workers and/or their spouses who are 65 or older must enroll in Medicare Parts A & B.
While employees must enroll in Medicare on their own, a little help from HR can go a long way. When questions about Medicare eligibility and enrollment arise, never hesitate to encourage a visit to a local Social Security Administration office or Medicare.gov.
Major insurers are reporting that value-based care initiatives are yielding good results for payers, providers and patients. Employer groups and individuals covered under insured plans, Medicare and Medicaid, are receiving more consistent, quality care that is easier to navigate. This is music to the ears of Alex Azar, HHS secretary, who has been a strong supporter of value-based care.
While the concept of value-based care dates back to the Obama administration, Azar believes it can accomplish more. In a recent speech to the Federation of American Hospitals, he advocated for enabling consumers to gain more control over their health information, increasing transparency from providers and payers and easing government burdens in both Medicare and Medicaid.
In a previous newsletter, we discussed bundling introduced by Medicare which focuses on orthopedic and cardiac procedures. Through the mandatory initiative for comprehensive care for joint replacements (CJR), which became policy in 2016, some 800 hospitals are participating in the program.
While some sources report the results of bundling as mixed, Medicare reports that joint replacement payments increased by approximately 5% nationally, but decreased 8% for BPCI participants. One large health system achieved a 20.8% episode decrease and another reported a significantly shorter prolonged length of stay – a sign of fewer complications resulting from surgery.
Providers, both acute and post-acute, shared in the savings and indications are that post-acute savings were achieved because their care was bundled, placing these providers at risk. Even though efforts to repeal and replace or modify the Affordable Care Act are on hold, more healthcare providers and payers can be expected to embrace bundling going forward.
In preparation for the Medicare fall open enrollment period, employers sponsoring group health plans that include prescription drug coverage are required to notify all Medicare-eligible individuals whether such coverage is “creditable” under the law. Creditable coverage means that the coverage is expected to pay, on average, as much as the standard Medicare prescription drug coverage.
Written Disclosure to Individuals
Employers can satisfy this notice requirement by providing a written disclosure notice annually by October 14, and at various other times as required under the law, to the following individuals:
Medicare-eligible active working individuals and their dependents (including a Medicare-eligible individual when he or she joins the group health plan);
Medicare-eligible COBRA individuals and their dependents;
Medicare-eligible disabled individuals covered under an employer’s prescription drug plan; and
Any retirees and their dependents.
Model notices are available from the Centers for Medicare & Medicaid Services (CMS).
Online Disclosure to CMS Also Required
Additionally, employers are required to complete an online disclosure to CMS to report the creditable coverage status of their prescription drug coverage. This disclosure must be completed annually no later than 60 days from the beginning of a plan year, and at certain other times.
Our section on Medicare further details how the program impacts group health plans.