Regulations on PPACA’s state exchanges are expected in June, according to Mark C. Nielsen, an attorney with Washington-based Groom Law Group.

Nielsen spoke Monday at the Washington Legislative Update held by International Foundation of Employee Benefit Plans.

Nielsen stresses that it’s pertinent for employers to take a look at the exchange regulation – which may run 1,000 pages – when it comes out. “It may be painful to go through (but) that is going to be the place where (the Department of Health and Human Services) is really going to start taking its hand as to what types of federal regulations or what type of federal floor it will be setting on these exchanges. I think any type of employer coverage that is going to be offered post-2014 will have to take a look at what kind of coverage is offered on the exchange because that is what employees will potentially be looking at and saying, ‘If I’m eligible for something I could get better coverage there.’”

Nielsen explained what will be needed with the 2014 exchanges. “There’s a huge number of regulations that we will need, there’s a lot of IT components that go into it, it’s going to cost billions of dollars for the federal government to get these programs up and running. Regardless of rather you like the law or not, the bottom line is unless there is something to replace this law, come 2014 if this law is still on the books, then the exchanges have to be up and running and functional. 

“It’s going to be a really tough world in 2014. The upside though is that there is flexibility particularly with self-funded plans in the post-2014 world that is not available for coverage on the exchange,” he says. “Self-funded plans are not required to offer coverage of essential benefits,” as defined by PPACA. “I would start with the exchanges and hold on tight for a fun ride with HHS,” Nielsen says.

On May 19, HHS issued proposed regulations requiring that, beginning in September, health insurers seeking to increase their premium rates by 10% or more will have to notify the state, and in some cases the federal government, of the proposed rate and the state has ultimate authority whether or not to approve it. “Health and Human Services doesn’t have the right to reject the rate but they can determine that it is unreasonable and they will post it on their website,” Nielsen says, and this means insurers have to post it on their site as well.

 “It’s a lot of pressure on insurers to try to deal with this,” he says, “The rate regulation also requires any state in the process now for rate approval is going to be required to allow input from the public as to the reasonableness of rates.”

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