Healthcare Reform, also known as the Patient Protection and Affordable Care Act (PPACA) is the landmark legislation signed into law by President Obama in March of 2010. This law affects both employees and employers in a variety of ways, with many provisions already in effect and many more to come in the years ahead.
Rules and regulations, the implementation process, reporting, and other key elements of Healthcare Reform continue to evolve. The A.I. Group is committed to providing the latest Healthcare Reform news and to helping our clients understand it’s strategic, financial, and operational impacts.
Healthcare Reform Timeline
2010
2010
- Auto-enrollment in health plans for employers with 200+ employees. Enforcement delayed.
- Non-taxable adoption assistance increased to $13,170. Expires 12/31/2011.
- Elimination of annual and lifetime limits on essential benefits.
- Preventive care covered at 100% with no cost-sharing to employee/member.
- Extension of coverage to adult dependent children to age 26.
- Prohibition on rescission. Coverage cannot be cancelled except for fraud or misrepresentation.
- Non-discrimination requirements (under IRC Section 105(h)) extended to fully-insured health plans. Enforcement delayed – December 2011.
- Health plans must implement internal and external appeals process.
- Patient protections. Plans that require designation of PCP must allow member to choose any available PCP; plans must comply with access requirements for emergency care and OB-GYN.
- Premium review. Fully insured plans required to justify “unreasonable” premium increases.
- Elimination of pre-existing condition exclusions for covered children under age 19.
- Temporary reinsurance program for early retiree health plan expenses.
- Small employer (less than 25 FTEs) healthcare tax credit.
- Mandatory break time for nursing mothers.
- Employers prohibited from offering incentives to employees for enrolling in high risk pool.
- Grandfathered health plans exempt from certain HCR requirements.
2011
2011
- Over the counter (OTC) drugs no longer eligible for reimbursement under FSAs, HRAs, and HSAs.
- Under the CLASS Act, employers may elect to enroll employees in government run long term care insurance program. Program delayed January 2011, determined unworkable – October 2011.
- W-2 reporting of employer provided health care coverage. Requirement amended – voluntary reporting in 2011. Employers with 250 or more W-2s must report in 2013 for 2012 tax year, employers with fewer than 250 W-2s granted temporary transitional relief – May 2011.
- Ineligible HSA distributions subject to 20% excise tax (increased from 10%).
- Simple cafeteria plans for employers with 100 or fewer employees.
- Grants to small employers to establish comprehensive workplace wellness programs.
- Prescription drug discounts under Medicare Part D.
- Insurers of group health plans must provide certain reports to HHS regarding loss ratios and must provide premium rebate to participants if loss ratio is below 85%.
2012
2012
- Health plans must provide plan participants a uniform summary of benefits and explanation of coverage. Requirement delayed – November 2011. Final rule released February 2012; rule takes effect 9/23/2012 or the first renewal thereafter.
- Businesses required to file 1099 for all vendors from which they purchase $600 or more in goods and services. Provision repealed – April 2011.
- W-2 reporting of employer provided health care required for employers with 250 or more W-2s. W-2s will be issued January 2013 for 2012 tax year. Temporary transitional relief provided to employers issuing fewer than 250 W-2s – May 2011.
- Health plans to submit quality of care reports to HHS and plan participants during open enrollment.
- Health plans required to cover expanded preventive care services, such as FDA-approved contraception methods, well-woman visits, HPV DNA testing for women 30 years and older, HIV screening and counseling, etc. without charging a co-payment, co-insurance, or deductible. Provision enacted August 1, 2011 - effective August 1, 2012, or the first renewal thereafter.
2013
2013
- Employee contributions to health FSAs limited to $2,500.
- Hospital insurance tax of 0.9% on individuals earning $200,000 or $250,000 if filing joint tax return.
- 3.8% tax imposed on high income individuals’ net investment (unearned) income.
- Elimination of tax deduction previously allowed for Medicare Part D subsidy.
- Notice of coverage options to employees at time of hire or by 3/1/2013; notice advises of the existence of an Exchange and possibility of a subsidy if employer contributes less than 60% of the cost of coverage.
2014
2014
- All individuals required to have health coverage.
- Insurance Exchanges established.
- Elimination of pre-existing condition exclusions for all (individuals, group health plan participants, etc.)
- Elimination of annual benefit limits in health plans.
- Implementation of $2 per participant research fee for plan years ending after 9/30/2012, $1 for plan years ending 2013 through 9/30/2019.
- Guaranteed policy issue and renewal for all group health plans.
- Wait period for employee health plan coverage may not exceed 90 days.
- Maximum incentive amount for wellness programs increases from 20% to 30% of the COBRA cost of coverage.
- Coverage for participation in clinical trials must be allowed.
- Employers must provide Free Choice Vouchers to employees in certain instances. Provision repealed – April 2011.
- Increase in small employer (less than 25 FTEs) healthcare tax credit.
- Penalties to employers (50 or more FTEs) who do not offer FTEs health coverage.
- Cap imposed on annual out of pocket maximum for HDHPs to not exceed $2,000 for individual and $4,000 family.
- Compliance with HHS standards for electronic transactions.
- Employers must report to IRS minimum essential coverage paid for by the employer.
2018
2018
- Cadillac Plan Tax imposes 40% tax on the value of coverage in excess of $10,200 for individual and $27,500 for families.
Frequently Asked Questions
Q. My child is over the age of 19 and no longer in school. Can I cover him/her under my group health plan?
A. Yes. Adult children may be covered under group health plans up to the age of 26. Your child is no longer required to be a full-time student, live with you, or be financially dependent on you. Further, parents may also cover an adult child who is married. However, the parent cannot cover the spouse of a married child or the adult child’s children.
Q. My child was born with a medical condition. Can my employer’s group health plan refuse to cover him/her?
A. If your employer’s group health plan allows for dependents to be covered, you may cover the child as one of your dependents. Insurers may no longer deny coverage or impose pre-existing condition limitations for children under the age of 19.
Q. Can I purchase over the counter (OTC) drugs or medications with pre-tax money in my FSA, HSA, or HRA?
A. As of January 1, 2011, you may only purchase OTC drugs or medications with pre-tax FSA, HSA, or HRA funds with a prescription from your doctor or health care provider. You may continue to purchase insulin, without a prescription, with pre-tax funds. You may also purchase items such as bandages, contact lenses, crutches, etc. with money in your FSA, HSA, or HRA. Items purchased must be considered qualified medical expenses as defined in IRS Publication 502 Medical and Dental Expenses (http://www.irs.gov/pub/irs-pdf/p502.pdf).
Q. Under Healthcare Reform, preventive care in non-grandfathered health plans is covered at 100% with no cost sharing. What does this mean? What services are covered?
A. No cost sharing means that you cannot be charged a co-pay or co-insurance for receiving a qualified preventive care service from an in-network provider. Preventive services are outlined by the U.S. Preventive Services Task Force and include pediatric care and child wellness from birth to age 21; vaccines for children, adolescents, and adults; preventive care for women; and evidence-based preventive services such as breast and colon cancer screenings, screenings for diabetes, high cholesterol, and high blood pressure. Preventive care services also follow the U.S. Preventive Services Task Force guidelines on age and frequency of service.
Q. Is a non-grandfathered health plan required to cover preventive care services at 100% both in-network and out of network?
A. No. If your non-grandfathered health plan has both an in and out of network benefit, the plan is only required to cover preventive services at 100% with no cost sharing when in-network providers are used. If out of network providers are used, co-pays and co-insurance may apply.
Q. Employers who file more than 250 W-2 per year must begin reporting the cost of employer sponsored health coverage on employees W-2s in 2013, for the tax year 2012. What coverages are included in the cost?
A. Employers must report the cost of medical, dental*, vision*, prescription drug coverage, employer contributions to health care FSA accounts, and executive physical benefits. Fully-insured plans may use the premium amount charged by the insurer as the cost of coverage; self-insured plans may use the applicable COBRA premium cost, less the 2% administrative fee.
* Dental and vision costs are excluded if they are offered under stand-alone plans through a separate policy, contract, or certificate of insurance.
