GEHA and Health Care Reform
Updated on July 26, 2010

Here is the latest from GEHA President Richard Miles on health care reform and how it will affect GEHA and our members:

We're continunig to learn more about how the health care reform law will affect the Federal Employees Health Benefits (FEHB) program. Plenty of questions remain, however. Here at GEHA, we are working hard to assess how and when its components might affect our members.

We will keep our members informed through our Keynotes newsletter and through future updates to this webpage. For monthly updates as GEHA receives guidance from OPM and other agencies, be sure to subscribe to our Health e-Report newsletter.

With that said, here's where things stand today:

Pre-Existing Condition Insurance Plan (PCIP)
GEHA has been selected by the Department of Health and Human Services (HHS) to administer the national Pre-Existing Condition Insurance Plan (PCIP) in more than 20 states.

There are no changes in store for federal employees and retirees who are members of GEHA. Plans, premiums, providers and customer service will not change.

PCIP, which was established in federal health care reform legislation, will provides affordable health insurance coverage to Americans who have been uninsured for six months or more because of pre-existing conditions. States were given an option to administer their own high-risk pool under this temporary program or allow HHS to carry out coverage. For the more than 20 states that opted to not administer their own programs, HHS has contracted with GEHA for administration. The health reform law has allocated $5 billion for PCIP through 2014, when the temporary program will be replaced by new state-based health care exchanges. Eligible individuals will enroll through HHS.

For more information, please visit these websites:
   www.healthcare.gov – health care options available in all states
   www.pcip.gov – PCIP enrollment
   www.pciplan.com – rates and benefits for the PCIP states administered by GEHA

Coverage for dependents up to age 26
The health care reform law raises the dependent age limit for coverage until age 26. The effective date of this provision is the first day of the plan year that is six months following enactment of the law. For the FEHB program, that means January 1, 2011.

OPM would like the FEHB program to provide coverage to young adults up to age 26 before January 1, but the law governing the FEHB program specifically prohibits us from doing so. Legislation has been introduced in Congress that addresses this issue. GEHA is following its progress closely.

In the meantime, according to the OPM website:

Children turning 22 are automatically covered for an additional 31 days under the parent's coverage policy. During this time, families can decide to continue FEHB coverage for their adult child for up to 36 months through the Temporary Continuation of Coverage (TCC) program. Under TCC, adult children can continue their coverage by enrolling as an individual in any FEHB plan. Though there is no federal contribution toward the premium, the coverage policy is not subject to underwriting or pre-existing condition exclusions. Information about TCC is available at www.opm.gov/insure/health/faq/tcc.asp.

Excise tax on "Cadillac" health plans
Under the new law, we project that the "Cadillac" tax will not have an impact on our health plans until 2019 or possibly even later.

Flexible spending accounts
Reimbursements for medicine will be restricted to prescribed drugs and insulin. In other words, over-the-counter medications will no longer qualify for reimbursement under IRS section 105. This will affect FSAs, HRAs and HSAs. In addition, salary reductions for FSAs will be limited to $2,500 effective January 1, 2013.

In addition, the new reform law increases the penalty for withdrawing HSA funds to pay for non-qualified expenses from 10 percent to 20 percent.

Besides the items listed above that will directly impact GEHA, there might be other indirect consequences of the legislation that may affect our premium, but they are unknown at this time. For example, if hospitals and doctors become concerned that the planned cuts in Medicare will reduce their income, they may increase fees to their other customers. On the other hand, if more people have insurance, then hospitals and doctors will have less uncompensated care, and that may restrain future price increases.