Health Care Reform
The Patient Protection and Affordable Care Act (PPACA) is a federal statute signed into law by President Obama on March 23, 2010. The law includes a large number of health-related provisions to take effect over the next four years. As we continue to analyze the healthcare law, we will update this site to keep you informed.
Early Retiree Reinsurance Program
NOTICE: The ERRP notice sent on January 7, 2011 was federally mandated. Health Care and Benefits was required to mail the notice to all members. This notice was informational only, and no further action is required by our members.
WHAT IS IT?
The Early Retiree Reinsurance Program was created as part of the Affordable Care Act and allows participating employers to request reimbursement for a portion of the health care costs for early retirees and their dependents. In order to become a participating employer, the State of Montana (State) submitted an application to the U.S. Department of Health and Human Services (HHS) and received approval.
HOW DOES IT WORK?
Requesting reimbursement is a two step process. Prior to submitting each reimbursement request, the State is required to submit an Early Retiree List. The Early Retiree List is comprised of individuals who meet two primary considerations:
- The first consideration is whether the individual is an early retiree. This determination is based on age, plan participation, and employment status. The individual must be:
- 55 or older
- enrolled in our medical benefit
- not eligible for coverage under Medicare
- not an active employee
- If the member meets this criteria, the member's and their dependents' health care claims may be eligible for the ERRP program reimbursement to the State. They must have accumulated $15,000 or more in paid claims that are eligible for credit towards the ERRP cost threshold. Eligible claims are for a medical item or service that is covered by Medicare Part A, B, or D.
If the retiree and/or dependent meet the criteria, the State is eligible for the ERRP reimbursement for that member's and their dependents' claims and can be included on the Early Retiree List. The ERRP program will reimburse 80% of all claims between the $15,000 cost threshold and the $90,000 cost limit for each retiree or dependent. The maximum eligible amount reimbursed for an individual is $60,000 per calendar year.
FOR WHAT CAN THE MONEY BE USED?
The funds that the State receives under the ERRP program will be used according to the guidelines established by HHS. According to HHS, the money may be used:
1) To reduce the State's benefits costs,
2) To reduce plan participant's health benefit contributions, copayments, deductibles, coinsurance, other out-of-pocket costs, or any combination of these costs, or
3) To reduce any combination of the costs specified in 1 and 2.
The State is going to use the ERRP proceeds to help reduce our overall health benefits costs.
IS THE STATE COMPLYING WITH THE GUIDELINES ON THE USE OF ERRP FUNDS?
Yes. The State is required to demonstrate compliance of the proper use of ERRP Funds. The State chose the method for calculating the baseline amount that allows the use of a period consisting of up to five years of the most recent consecutive 12-month plan years, including the most recent plan year that ended before the ERRP application was submitted. The State submitted the ERRP application in plan year 2010; therefore the five year period of 2005 through 2009 was used to calculate the baseline amount.
Once the baseline amount has been calculated, the State must demonstrate it spent or allocated at least the same amount on health benefit costs for each plan year for which it submitted claims and received ERRP reimbursement monies.
The state calculated and did comply with the maintenance of contribution requirements for plan year 2010 and is continuing to monitor compliance going forward.
For additional information, please refer to www.errp.gov.
Update on ERRP Payment Processing February 17, 2012
Special Enrollment for Dependent Children
The Patient Protection and Affordable Care Act (PPACA) requires plans to offer coverage to adult children of covered members until age 26, even if the young adult is no longer living with his or her parents, is not a dependent on a parent’s tax return, is no longer a student or is married. The State of Montana is voluntarily offering this benefit before the implementation date required by the PPACA. Please visit our special enrollment webpage for additional information.
Flexible Spending Account - Over The Counter Change
Effective January 1, 2011, in accordance with the Patient Protection and Affordable Care Act (PPACA), distributions from medical Flexible Spending Accounts (FSAs) will be allowed to reimburse the cost of over-the-counter (OTC) medicines or drugs only if they are purchased with a prescription. Employees who use flexible spending accounts to purchase over-the-counter (OTC) drugs and medications, such as pain relievers, will need to supply a prescription from their health care provider to be reimbursed. This new rule does not apply to reimbursements for the cost of insulin, which will continue to be permitted, even if purchased without a prescription.
