VII. Insurance Premiums


Question 1: What is the HCRA obligation for "stop loss" insurance arrangements?

Question 2: What are "minimum premium plans" and how do HCRA surcharge obligations apply to such plans?

Question 3: Do the HCRA surcharges apply to Flexible Spending Accounts (FSA), Health Savings Accounts (HSA), or Health Reimbursement Accounts (HRA)?

Question 4: Do the HCRA surcharges apply to dental plans?

Question 5: Do the HCRA surcharges apply to payments made by church benefit plans?

Question 6: In situations where a trust fund exists, is it the trust fund or the entity represented by the trust fund (employer) responsible for making an election decision with the Public Goods Pool?

Question 7: How do the surcharges apply to life annuity and/or liability policies (e.g., some life insurance and some homeowner's policies).



Question 1: What is the HCRA obligation for "stop loss" insurance arrangements?

Answer 1: Accident and health "stop loss" insurance generally is a product sold to a self-insured employee benefit plan that limits the financial risks to the self-insured plan. It is typically written with individual and/or aggregate deductibles. If the covered expenses paid by a self-funded plan exceed such deductibles, the self-funded plan is indemnified or covered by the "stop loss" insurer. It is important to note that the "stop loss" policy is a contract between the self-funded plan and the "stop loss" insurer. From the point of view of an insured employee or a health care provider, the "stop loss" arrangement would be invisible, since the self-funded plan or its administrator would continue to pay claims even if the individual and/or aggregate deductibles are reached. The self-funded plan is simply reimbursed by the stop-loss insurer for amounts in excess of the individual and/or aggregate deductible limits. Under these circumstances, HCRA considers the self-insured plan as the payor responsible for remitting the appropriate surcharges, based on their election decision, and, if applicable, the regional GME percentage or covered lives assessment.

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Question 2: What are "minimum premium plans" and how do HCRA surcharge obligations apply to such plans?

Answer 2: A minimum premium plan is a fully insured plan in which the insurer, not the policyholder (employer), is responsible for the payment of plan benefits. In these types of arrangements the policyholder reduces its premium by making a special arrangement with the insurer so that the normal reserve components of the premium are not included. In its place, the policyholder establishes and funds a special account. However, the insurer pays all claims using its checks and in accordance with its policy with them. Since "minimum premium arrangements" are fully insured plans, HCRA surcharges are applicable to the insurer, rather than the policyholder, at rates based on their election decision with the Public Goods Pool, and if inpatient coverage is provided, either a regional GME percentage or covered lives assessment.

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Question 3: Do the HCRA surcharges apply to Flexible Spending Accounts (FSA), Health Savings Accounts (HSA), or Health Reimbursement Accounts (HRA)?

Answer 3: Not directly. FSAs, HSAs, and HRAs are not considered third party payors for purposes of establishing surcharge or assessment obligations. For purposes of the HCRA surcharges and assessments, FSAs, HSAs and HRAs are considered reimbursement accounts for unreimbursed qualified medical expenses. However, since most patient services revenue that HCRA providers receive are subject to a HCRA surcharge, most invoices for their services will include a HCRA surcharge, and, possibly a regional GME percentage surcharge for inpatient claims. The information below outlines the HCRA surcharge percentages that apply to each reimbursement account for payments made for surchargeable services:

FSAs:

The FSA is strictly a reimbursement account for unreimbursed medical expenses funded by either the employee's redirected salary and /or employer contributions. As such, an FSA account is not a third party payor within the meaning of PHL §2807-j, §2807-s, or §2807-t, and therefore, plays no role in determining the surcharge percentage on a surchargeable claim.

  • If the individual has insurance coverage for the service, the surcharge percentage on the bill for services is always determined by the election status of the primary payor. Covered lives assessment obligations are applicable to the insurer if it is a specified third party payor, as described in PHL §2807-s and §2807-t, and, the insurer is an elector with the PGP. If the insurer is not an elector, and the provider is billing for inpatient services, the bill should reflect an additional regional GME percentage surcharge.
  • If the individual does not have insurance coverage, or lacks coverage for a particular service, then they are "self-pay" and the surcharge on the claim will be the Self Pay/Uninsured rate, pursuant to PHL §2807-j(2)(e), with no regional GME surcharge for inpatient claims.

HSAs:

An HSA is available to virtually anyone who has coverage under a qualifying high deductible health plan (HDHP). The HSA is strictly a reimbursement account for unreimbursed medical expenses funded by either the employee and/or employer contributions. As such, an HSA account is not a third party payor within the meaning of PHL §2807-j, §2807-s, or §2807-t, and therefore, plays no role in determining the surcharge percentage on a surchargeable claim.

  • Since the individual must have insurance coverage (HDHP) to participate in a HSA, the surcharge percentage is always determined by the election status of the primary payor. In addition, covered lives assessment obligations are applicable to the HDHP, if it is a specified third party payor, as described in PHL §2807-s and §2807-t, and, the insurer is an elector with the Public Goods Pool. If the insurer is not an elector, and the provider is billing for covered inpatient services, the bill should reflect an additional regional GME percentage surcharge, in addition to the non-elector surcharge percentage.

Example: Husband has family HDHP coverage and the wife has individual HDHP coverage. The wife's HDHP will be primary for her claims, and the husband's HDHP will be primary for his claims.

HRAs:

The HRA is strictly a reimbursement account for unreimbursed medical expenses funded solely by the employer. As such, an HRA is not a third party payor within the meaning of PHL §2807-j, §2807-s, or §2807-t, and therefore, plays no role in determining the surcharge percentage on a surchargeable claim.

  • If the individual has insurance coverage, the surcharge percentage on the claim is determined by the election status of the primary payor. In addition, covered lives assessment obligations are applicable to the insurer if it is a specified third party payor, as described in PHL §2807-s and §2807-t, and, the insurer is an elector into the Public Goods Pool. If the insurer is not an elector, and the provider is billing for covered inpatient services, the bill should reflect an additional regional GME percentage surcharge, in addition to the non-elector surcharge percentage.
  • If the individual does not have insurance coverage, or lacks coverage for a particular service, then they are "self-pay" and the surcharge on the claim will be the Self Pay/Uninsured rate, pursuant to PHL §2807-j(2)(e), with no regional GME percentage surcharge for inpatient claims.
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Question 4: Do the HCRA surcharges apply to dental plans?

Answer 4: When dental services are provided by a HCRA designated provider, as defined in PHL §2807-j(1-a)(a), (Article 28 general hospitals, and their extension clinics, diagnostic and treatment centers providing comprehensive primary care, and, diagnostic and treatment centers providing ambulatory surgical services) the HCRA surcharge applies at rates based on the third party payor's election status with the Public Goods Pool. If the dental plan provides inpatient hospital coverage, and the plan is a specified third party payor as defined in PHL §2807-s, there is also an obligation to pay the regional GME percentage surcharge or covered lives assessment, depending on the election status of the plan.

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Question 5: Do the HCRA surcharges apply to payments made by church benefit plans?

Answer 5: Church benefit plans which provide disability and/or health benefits to church employees are fully subject to the surcharges and assessments at rates based on their election status with the Public Goods Pool, and where inpatient hospital coverage is provided, the regional GME percentage surcharge or covered lives assessment, whichever is applicable. There is no provision in the Public Health Law that exempts payors from the surcharge requirements based on the payors' tax exempt status under the Internal Revenue Code. Benefit plans assuming risk for the provision of health benefits for covered employees are self-insured for purposes of the surcharge requirements and as such, are no different than other self-funded plans insuring their employees.

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Question 6: In situations where a trust fund exists, is it the trust fund or the entity represented by the trust fund (employer) responsible for making an election decision with the Public Goods Pool?

Answer 6: The entity bearing risk for providing medical benefits for covered employees is the one that would elect to pay HCRA surcharges directly, if they so chose. For purposes of requirements of the HCRA, the entity is considered self insured, and as such, is subject to the surcharges, at rates based on their election status, and, either a covered lives assessment obligation for their insured residing in NYS if an elector, or a regional GME percentage surcharge on inpatient claims if a non-elector.

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Question 7: How do the surcharges apply to life annuity and/or liability policies (e.g., some life insurance and some homeowner's policies).

Answer 7: For HCRA surcharge purposes, a distinction must be made between such policies where the contractual liability of the payor for rendered services is solely triggered by a negligent act (or some other event) and traditional health insurance policies. For example, "liability type" policies such as homeowners' policies, by design, are typically written to reimburse the homeowner/policy owner for a loss occasioned by a negligent act or some other event occurring on the property of the homeowner/policy owner. Conversely, traditional health insurance policies provide accident and health, worker's compensation, no-fault and similar types of coverage.

Payors making payments to designated HCRA providers under such "liability policies", are not "third-party payors" as defined in PHL §2807-j (1-a)(c) and therefore are not obligated to make an election decision. Payors in these instances are considered unspecified payors and their surcharge liability is limited to the uninsured rate pursuant to PHL §2807-j(2)(e) with no regional GME percentage surcharge or covered lives assessment.

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