26 December 2010

IRS Eases FSA Debit Card Rules

According to National Underwriter, the IRS says that personal health account debit card users can still use the card to buy doctor-prescribed over-the-counter (OTC) drugs at a wide range of stores after January 15, 2011. IRS Notice 2011-5 changes the prior requirement in IRS Notice 2010-59 that OTC drugs can only be purchased at retailers with ‘inventory information approval systems’ (HAS). Now, FSA and HRA cards can be used to buy OTC drugs without submitting receipts at many retailers that simply save information about the transactions. One new set of rules will apply to ordinary drug stores, other types of retailers that have pharmacies, and mail-order and web-based vendors that sell prescription drugs. A second, looser set of rules will apply to retailers that have health card merchant cards built into their debit card systems buyt have no pharmacy operations. The IRS wants to apply another set of rules – the rules given in Notice 2010-59 – to 90% pharmacies, or pharmacies that get 90% of gross receipts from the sale of items that the IRS classifies as medical items.

07 December 2010

All insured plans will be required to meet the MLRs…

According to the Business Insurance December 6, 2010, issue, a health care reform rule that caps how much insurers can spend on administrative costs is likely to cause headaches for employers that offer fully insured health plans to their workers. Self-funded plans also may be peripherally affected if insurers decide to cut back on services that are not included as medical expenses under the medical loss ratio definition that the Dept. of Health and Human Services issued last month, stating that only costs directly attributable to medical care and health care quality improvement can be included in health insurers’ MLRs. The MLRs were set at 80% for individual coverage and small groups and 85% for large groups. Under the Patient Protection and Affordable Care Act, health insurers must rebate to policy-holders any amounts in excess of the allowed respective 20% or 15%.

Because many employers offer at least one fully insured health plan to their employees, employers that receive a rebate must allocate to employees a sum that is proportionate to their individual premium contribution. MLRs and rebates will be calculated state-by-state. Carriers that fail to meet a state’s MLR requirements would have to give rebates to entities paying the premium; for employer plans, it will be paid to the employer, which has to allocate it proportionately to the employees. For example, an employer paying 50%, they would have to give 50% of it to the employees. Since most of the employer contribution schemes are more complicated, it can cause administrative complications. All insured plans will be required to meet the MLRs beginning January 1, 2011