Aetna 2008 Annual Report Download - page 33

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• Restricting the ability of health plans to establish member financial responsibility.
• Regulating the individual coverage market by restricting or mandating premium levels, restricting our
underwriting discretion or restricting our ability to rescind coverage based on a member’ s misrepresentations
or omissions.
• Requiring employers to provide health care coverage for their employees.
• Requiring individuals to purchase health care coverage.
• Allowing significantly expanded access to Medicaid, Medicare, the Federal Employees Health Benefit Plan
or other government-based health insurance programs, or creating other government-run insurance programs
that would compete with commercial health plans.
For example, on October 3, 2008, the Paul Wellstone-Pete Domenici Mental Health Parity and Addiction Equity Act
2008 (the “Mental Health Parity Act”) was enacted into law as part of an end of session package that included the
Emergency Economic Stabilization Act of 2008. The Mental Health Parity Act will become effective for plan years
beginning one year after enactment and will require employers that voluntarily provide both medical and mental
health benefits to provide such benefits on the same terms and conditions with respect to financial requirements and
treatment limitations. The Mental Health Parity Act does not prescribe the method(s) employers and group health
plans may use to achieve this “parity” requirement.
Some of the changes, if enacted, could provide us with business opportunities. However, it is uncertain whether we
can counter the potential adverse effects of such potential legislation or regulation, including whether we can recoup,
through higher premiums, expanded membership or other measures, the increased costs of mandated benefits,
assessments or other increased costs.
We also may be adversely impacted by court and regulatory decisions that expand the interpretations of existing
statutes and regulations or impose medical malpractice or bad faith liability. Among other issues, federal and state
courts continue to consider cases addressing group life insurance payment practices and the pre-emptive effect of
ERISA on state laws. In general, limitations to ERISA pre-emption have the effect of increasing our costs, liability
exposures, or both. The legislative initiatives discussed above include proposals in the U.S. Congress to restrict the
pre-emptive effect of ERISA and state legislative activity in several states that, should it result in enacted legislation
that is not pre-empted by ERISA, could increase our liability exposure and could result in greater state regulation of
our operations.
The Employee Retirement Income Security Act of 1974 (“ERISA”)
The provision of services to certain employee benefit plans, including certain Health Care, Group Insurance and
Large Case Pensions benefit plans, is subject to ERISA, a complex set of laws and regulations subject to
interpretation and enforcement by the Internal Revenue Service and the Department of Labor (the “DOL”). ERISA
regulates certain aspects of the relationships between us and employers who maintain employee benefit plans subject
to ERISA. Some of our administrative services and other activities may also be subject to regulation under ERISA.
DOL regulations under ERISA set standards for claim payment and member appeals along with associated notice
and disclosure requirements. Recent final and proposed regulations would require additional disclosures to
employers of certain types of indirect compensation we receive. We have invested significant resources to comply
with these standards, which represent an additional regulatory burden for us.
Certain Large Case Pensions and Group Insurance products and services are also subject to potential issues raised by
certain judicial interpretations relating to ERISA. Under those interpretations, together with DOL regulations, we
may have ERISA fiduciary duties with respect to certain general account assets held under contracts that are not
guaranteed benefit policies. As a result, certain transactions related to those assets are subject to conflict of interest
and other restrictions, and we must provide certain disclosures to policyholders annually. We must comply with
these restrictions or face substantial penalties.
Federal Employees Health Benefits (“FEHB”) Program
Our subsidiaries contract with the Office of Personnel Management (“OPM”) to provide managed health care
services under the FEHB Program in their service area. These contracts with the OPM and applicable government
regulations establish premium rating arrangements for this program. The OPM conducts periodic audits of its
contractors to, among other things, verify that the premiums established under its contracts are in compliance with