InsuranceNewsNet Magazine January 2011 : Page 22
2011: CHANGE JANUARY 1 WHAT YOU CAN EXPECT • Continuing challenges to part or all of health care reform. These will come by way of amendments to the act, lawsuits, state ballot initiatives, early requests for waivers and efforts to amend/repeal the legislation. But others will work hard at implementing the law, such as starting state insurance exchanges. • Optional federal charter legislation might be back on the agenda in Congress. • Frantic activity at the IRS and at employ -ers, as both work to comply with the new income tax environment. • Continued fireworks over the estate tax. The deal Congress approved is only for two years. • Some states will start considering two new model acts developed by the National Confer-ence of Insurance Legislators. One sets rules for life carriers when they offer retained asset accounts; the other governs disclosure to life insurance consumers about alternatives to lapsing or surrendering their policies. • More state compliance with the annuity suit -ability requirements in the Harkin amend-ment to Dodd-Frank. The amendment says that states can regulate indexed annuities if they adopt the annuity suitability standards developed by the National Association of Insurance Commissioners (NAIC) by June 2013. Currently, about 40 states have adopted the standards. ROADMAP A GUIDE TO WHAT’S NEXT • The new Federal Insurance Office (FIO), established under Dodd-Frank, begins eval-uating how to modernize and improve insur-ance regulation. Its responsibilities include monitoring all aspects of the insurance indus-try (except health insurance, some long-term care insurance and crop insurance), and mak-ing recommendations to the new Federal Sta-bility Oversight Council (FSOC) about insur-ers that may pose a risk. The FSOC is tasked with monitoring systemic risk throughout the financial system. One of the most significant aspects of the FIO is a report that it is sup-posed to produce on modernizing insurance, which is due in January 2012. Many see this report, and this office, as a first step toward federal regulation of insurance. • Federal subsidies begin, under ACA, for generic prescriptions filled in the Medicare Part D coverage gap, called the “doughnut hole.” Also, pharmaceutical manufacturers must now provide a 50 percent discount on brand-name prescriptions filled in the Medi-care Part D coverage gap. • Seniors on Medicare start receiving certain free preventive services, such as annual well-ness visits and personalized prevention plans. • Minimum Medical Loss Ratio (MLR) require -ments take effect, as required by the ACA. Under interim regulations of the Depart-ment of Health and Human Services (HHS), group and individual health insurers must now spend a certain percentage of policy-holder premiums on medical expenses — or pay rebates to consumers if they do not com-ply. Some states, such as Iowa, are already seeking exemption from the MLR regulations. Some agent trade associations are planning to push for a modification that would effectively exclude agent/broker commissions from the minimum MLR calculations. • A five-year program that provides a 10 percent Medicare bonus payment for primary care services, and a 10 percent Medicare bonus payment to general surgeons practicing in health professional shortage areas begins. • The Center for Medicare and Medicaid Inno -vation (CMMI) is established, as required by the ACA. It will test new payment and deliv-ery system models to reduce costs while main-taining or improving quality. • Income-related Medicare Part B premiums for 2011-2019 are now frozen at 2010 levels, and the Medicare Part D premium subsidy is now reduced for those with incomes above $85,000/individual and $170,000/couple. • Private Medicare Advantage plans freeze 2011 payments at 2010 levels and begin phasing in payments that are set at increasingly smaller percentages of Medicare fee-for-service rates. MA plans have other new limits as well. • The long-term care benefits program starts up. This is a national, voluntary insurance program for employers and self-employed individuals who want to buy into the fed-eral government’s new Community Living Assistance Services and Supports (CLASS) plan. Some interests are already pushing for a retooling or repeal of CLASS. • Tax-free Health Savings Accounts (HSAs) have new limits. Health Reimburse-ment Accounts or health Flexible Spend-ing Accounts cannot reimburse costs for over-the-counter drugs not prescribed by a doctor, and HSAs or Archer Medical Savings Accounts (MSAs) cannot reimburse these costs on a tax-free basis. Also, taxes on non-qualified distributions from HSAs or Archer MSAs increase to 20 percent of amount used. • New York’s controversial Insurance Regula -tion 194 takes effect. It requires producers to disclose information about their compensa-tion to consumers. JANUARY 3 • The new U.S. Congress convenes. Although the Bush-era tax rates and new estate tax structure were approved, it was for two years, ensuring further fighting over tax pol-icy. Some have said although they backed the deal for providing certainty, it still leaves some insecurity about what comes next. JANUARY 21 • The Securities and Exchange Commission (SEC) reports to Congress, as required by Dodd-Frank, on regulation of broker/deal-ers and investment advisors when providing investment advice about securities. The SEC will include analysis of whether the fiduciary standard should apply to investment advisors as well as B/Ds. Insurance organizations have been advocating for the current suitability standard and against the fiduciary standard of care, which they say would fundamentally change how insurance is sold. • Public companies, including public insur -ance companies, are now subject to the “say on pay” and “golden parachute” provisions of Dodd-Frank. 22 InsuranceNewsNet Magazine January 2011
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