Benefits U

On February 9, HHS issued its final rule regarding the Summary of Benefits and Coverage (SBC) provision contained in the 2010 Healthcare Reform law. The SBC rule applies to both fully insured and self-insured group health plans (domestic and international) , and applies to grandfathered plans.

The rule requires that insurers and health plans provide a standardized Summary of Benefits and Coverage (SBC) and Uniform Glossary to consumers “when shopping for coverage, enrolling in coverage, at each new plan year, and within seven (7) business days of requesting a copy from their health insurer or group health plan.”

 The SBC will describe health plan benefits in easy to understand terms; it will include what the plan will cover, what limitations or conditions will apply, and coverage examples. These examples are a key feature of the SBC, illustrating how much coverage the plan would provide in an event such as having a baby or managing Type II diabetes. These examples are designed to help consumers understand and compare what they would have to pay under each plan that they are considering.

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Healthcare Reform legislation requires employers to report, on Form W-2, the total cost of coverage under an employer-sponsored group health plan provided to an employee. According to the IRS, applicable employer-sponsored coverage “is coverage under a group health plan that the employer makes available to the employee that is non-taxable to the employee.”

Employers who will issue 250 or more W-2s for the 2011 tax year are required to required to report coverage for the 2012 tax year; W-2s for 2012 must be issued in January 2013. (Note: the employer requirement is not based on the number of covered employees, but on the number of W-2s issued by an employer, including those issued to active, terminated, full-time, part-time, and seasonal employees.) Transitional relief has been given to “small” employers, those who issue fewer than 250 W-2s until further guidance is issued. When guidance is issued, it will apply prospectively and will not apply to any calendar year beginning within 6 months of the date guidance is issued.

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As part of the Patient Protection and Affordable Care Act, health insurers and self-insured group health plans are required to begin providing a standard summary of benefits and coverage for health plans beginning on or after March 23, 2012.

On November 17, 2011 the Department of Labor (DOL) responded to concerns regarding the timeframe and lack of final regulations. The notice stated “until final regulations are issued and applicable, plans and issuers are not required to comply with section 2715 of the Public Service Act” and that the final rules and guidance will be issued “as soon as possible.”

The DOL also commented that once the final regulations are issued they will also provide a date the regulations will apply that allows health plans and insurers sufficient time to comply.

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The Supreme Court announced today that it will hear arguments in the spring to determine the constitutionality of Healthcare Reform’s individual insurance mandate.  Supreme Court justices will hear over five hours of arguments in March and are expected to render a decision by late June 2012 on HCR’s requirement that individuals buy health insurance beginning in 2014 or pay a penalty.    

In addition to deciding whether the law’s individual insurance mandate is constitutional, the justices will also determine whether the rest of the law can take effect even if that particular mandate is held unconstitutional.  Opponents of the law believe that if the individual requirement fails, the entire Act should fail.  A decision in late June is expected to have a significant impact on the 2012 presidential election.

On October 14, 2011, the U.S. Department of Health and Human Services announced that Healthcare Reform’s Long Term Care insurance program was unworkable and would not be implemented.

The Community Living Assistance Services (CLASS) Act program was intended to provide a basic lifetime benefit of at least $50 a day in the event of illness or disability. Coverage would have been provided to employees through the workplace, with all premiums paid by employees. The program was originally set to begin in January 2011 but was delayed earlier this year.

Public awareness of long term care insurance is growing and more and more employers now offer long term care insurance as a voluntary employee benefit. Premiums for coverage through an employer-sponsored plan are often lower than employees would pay for individual policies and coverage can be deducted through a salary deferral arrangement.