| Employer/Group Health Plan Impact |
Effective Date |
Plan Design
Each of these changes must be reflected in the Plan Document no later than the Effective Date. Self-insured plans will also need to renegotiate terms in their stop loss policies.
|
No pre-existing condition exclusions for children under 19 |
Plan years beginning after September 22, 2010
|
| Must cover children under age 26 (until 2014, limited to children who do not have other employer-sponsored coverage available) (The coverage will be nontaxable) |
| No lifetime maximums on essential benefits |
| May only have “reasonable” annual limits on essential benefits (as determined by the Department of Health and Human Services (“HHS”) guidance) |
| No pre-existing condition exclusions for any covered person |
Plan years beginning after 2013
|
| Limit on deductible for essential benefits ($5,000 for individual and $10,000 for family in 2014) |
| Maximum waiting period of 90 days |
| May not discriminate against a provider acting within the scope of his or her license with respect to participation or coverage under a plan (It is unclear how this provision is intended to affect employer health plans. It may mean plans may not reduce benefit levels for out-of-network coverage or it may mean that plans must not exclude certain providers from coverage. We expect additional guidance.) |
| Cap on wellness program incentives increased from 20% to 30% of total premium (HHS may issue regulations that would increase the cap to 50%) |
| External Appeal Review |
Must provide an external appeal review process (HHS to issue guidance) |
Plan years beginning after September 22, 2010 |
| Automatic Enrollment |
Must automatically enroll new full-time employees in health coverage; employees may opt out; HHS to issue regulations |
As provided in HHS regulations |
| Option Covering Essential Benefits |
Must offer at least one health plan option that covers all “essential benefits” (as defined by HHS regulations) to all full-time employees (30+ hours per week) and dependents
Annual Penalty: Tax penalty of $2,000 multiplied by number of full-time employees less 30. 1/12 of annual penalty imposed for each month |
January 1, 2014 |
| Premium Subsidy for Essential Benefits Option |
Must pay at least 60% of the premium (and employee’s premium contribution cannot exceed 9.5% of the employee’s family’s income) for the “essential benefit” option
Annual Penalty: Tax penalty of the lesser of (i) $2,000 multiplied by number of full-time employees less 30 and (ii) $3,000 multiplied by the number of employees receiving the premium assistance tax credit. 1/12 of annual penalty imposed for each month
|
January 1, 2014 |
Notices to Employees/Enrollees
|
Must provide notice to enrollees of any material change to a group health plan at least 60 days before the effective date of the change (e.g., notice of a material change effective January 1, 2011 must be provided no later than November 2, 2010) |
Plan years beginning after September 22, 2010 |
| Must include aggregate cost of health care coverage provided to each employee and his or her dependents on the employee’s W-2 |
Tax years beginning after 2010 |
| Must provide notice to employees: (i) of the state insurance exchange; (ii) that employee may be eligible for premium tax credit and cost sharing reduction if employer’s contribution is less than 60% of costs; and (iii) that employee may lose employer subsidy by choosing coverage through the exchange (HHS to issue regulations) |
March 1, 2013 |
| Must provide a uniform summary of benefits (to be established by HHS) to enrollees at enrollment/reenrollment (the summary of benefits will summarize information in the Summary Plan Description/Certificate of Coverage- it will be a maximum of 4 pages long) |
March 23, 2012 |
| Must provide a copy of the annual quality report provided to HHS to each enrollee during annual enrollment (see “Reporting to Government Agencies” section below for details about the quality report to HHS) |
HHS will issue guidance by March 23, 2012 |
| Must provide annual statement to each employee of the information filed with the IRS regarding the number of months during the calendar year the employee and his or her dependents were covered under the plan (see “Reporting to Government Agencies” section below for details about the information report to the IRS) |
Tax years beginning after 2013 |
Reporting to Government Agencies
|
Must file an annual “quality” report with HHS on issues related to improvement of health outcomes, including: (i) case management; (ii) care coordination; (iii) chronic disease management; (iv) prevention of hospital readmissions; (v) patient safety and reduction of medical errors; and (vi) wellness and health promotion activities |
HHS will issue guidance by March 23, 2012 |
| Must file an annual information return with the IRS regarding health insurance, including: (i) a certification that the employer offers essential benefits to its full-time employees and their dependents; (ii) the length of any waiting period; (iii) the monthly premium for the lowest cost coverage; (iv) the employer’s share of the premium; (v) number of full-time employees; and (vi) number of months during the year that each employee and dependent was covered |
Tax years beginning after 2013 |
| Temporary Early Retiree Reinsurance Program |
May be reimbursed by federal government for 80% of claims between $15,000 and $90,000 (indexed) for early retirees ages 55 through 64, but reimbursement must be used to reduce plan costs, premiums or participant cost-sharing |
June 23, 2010 to January 1, 2014 |
Health Flexible Spending Accounts
|
Non-prescription over-the-counter medication and supplies (other than insulin) will not be reimbursable from health FSAs (or from HSAs and HRAs) |
Tax years beginning after 2010 |
| Health FSA benefits capped at $2500 per year (increased annually for COLA) |
Tax years beginning after 2012 |
| Medicare Part D Subsidy |
Deduction for Part D subsidy eliminated (Employers will not be able to reduce retiree health liability by the expected subsidy for financial accounting) |
Tax years beginning after 2012 |
| Medicare Payroll Tax |
Must withhold additional 0.9% FICA tax on wages over $200,000 (single) or $250,000 (joint) |
Tax years beginning after 2012 |
| Temporary Per Covered Person Fee for Government Research |
Must pay a fee of $1 per covered person (increases to $2 per covered person in 2013) to federal government |
2012 for calendar year plans; increase 2013 for calendar year plans (fee set to end as of 2019) |
| Free Choice Vouchers for Certain Employees who Purchase Coverage through Health Benefits Exchange |
Each state must establish an Exchange through which qualified health insurance will be bought and sold. All individuals will be required to maintain minimum essential coverage. Employees may purchase the coverage through the Exchange. Employers will be required to subsidize the cost of the Exchange coverage (through vouchers) for employees who cannot afford the premium under the employer’s plan (employees (i) whose income does not exceed 400% of the federal poverty line and (ii) who are required to contribute between 8% and 9.8% of household income) in the amount of the most generous individual or family subsidy (as applicable) the employer provides. The amount paid by the employer for the voucher will be deductible to the employer as payment for personal services. |
January 1, 2014 |
| High Cost (Cadillac) Plan Excise Tax |
An excise tax equal to 40% of the “excess benefit” is imposed on an employer that provides a plan with a premium above $10,200 for employee-only or $27,500 for other coverage levels (indexed) |
Tax years beginning after 2017 |