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Advisory #2: Patient Protection & Affordable Care Act (PPACA)

Focus on: Stop Loss, Worksite and Limited Benefit Medical products

Message from HM Insurance Group President & COO Mike Sullivan

PITTSBURGH – (May 6, 2010) – As you help your clients plan for changes related to PPACA and help them to anticipate the impact of healthcare reform on their businesses, we know  you need answers, advice and coverage options.  HM Insurance Group wants you to know that we will be here to provide guidance and protection. Although the PPACA’s implementation details are unclear, HM’s analysis of the impact of the legislation on Stop Loss, Worksite and Limited Benefit Medical products has identified the following:

Stop Loss
The new law does not apply to Stop Loss but may indirectly impact Stop Loss due to changes resulting from new requirements for the underlying plan’s benefit design. HM will protect employers’ risks through fully-compliant Stop Loss policies with effective dates on or after October 1, 2010. Our policy will offer:

• The option of no annual limits
• The option of no lifetime limits, subject to regulatory approval
• Dependent coverage to age 26
• No pre-existing condition limitations

HM is working to meet the above requirements for policies written prior to October 1, 2010. We expect to be able to offer these provisions for employers who wish to meet the requirements sooner than mandated. You will be contacted as soon as the necessary changes are in place to address these enhancements. Additionally, we will identify ways that we can support your clients’ need to meet increased reporting requirements.

Worksite
HM’s Critical Illness, Accident, Term Life and Disability Income products are considered to be “excepted benefits” under the PPACA regulations due to their classification as asset protection insurance versus health benefits. Worksite/voluntary products will not be impacted by the creation of Exchanges, nor will they be impacted by changes to pre-existing condition limitations. Guaranteed issue will not be impacted, and the excise tax will not affect Worksite when these products are paid for by after-tax dollars.

We anticipate that the market demand for voluntary benefits purchased by employees at the worksite will be strong into the foreseeable future. Demand for products like HM Worksite Advantage likely will continue to increase, as employees look to cover expenses that are not covered by their healthcare insurance and bridge financial shortfalls caused by critical illness, accident or disability. Employees can use benefits that are paid directly to them to pay child care expenses, household bills and even to modify a home or vehicle.

Limited Benefit Medical
HM’s Limited Benefit Medical plan is considered to be an “excepted benefit” for purposes of Federal Law. HM Care Advantage is an indemnity plan, with payment based on a schedule of benefits, has no pre-existing condition exclusions and no additional annual or lifetime maximums. As such, it can be offered as a replacement plan to groups who currently have expense-incurred limited benefit plans or “mini-meds.”  The expense-incurred plans will be required to remove pre-existing condition exclusions and annual and lifetime limits for coverage effective October 1, 2010.

The changes resulting from healthcare reform will continue to increase the need for concise communication with your clients and their employees so that you can guide them to make the best decisions. HM Insurance Group is committed to helping you to help them with their choices. We will continue to bring you updates and work closely with you to address the challenges created by the PPACA. Please reach out to us with your questions and issues so that we may continue to work with you in the best interest of your clients.