Health Care Reform
The Patient Protection and Affordable Care Act (PPACA), also referred to as health care reform, set forth several new laws and regulations that impact business organizations of all sizes. The following health care reform checklist outlines 10 key PPACA compliance issues employers may need to complete in 2013.
Whether a business needs to complete each item depends on the type of employee health benefits offered, and business size. For example, if a small business offers an employer-sponsored group medical insurance plan, the requirements are different than if the business organization offers a stand-alone HRA (HRA).
1. Grandfathered Plan Status in regards to the Affordable Care Act.
A grandfathered group medical insurance plan is defined as being in existence when health care reform was made into law on March 23, 2010. If you make sure changes to your plan, your plan is not grandfathered.
If you have a grandfathered plan: Does it qualify to keep grandfathered status?
If you have changed to a non-grandfathered plan, confirm it meets PPACA requirements for 2013.
2. Annual Limits
PPACA restricts health plan plans from imposing annual or lifetime limits on essential health benefits (EHB). For plans beginning 9/23/12 – 1/1/14, the annual limits cannot be less than $2 million. Beginning in 2014, annual limits are prohibited.
If you offer a group plan: Confirm the plan’s annual limits are actually in compliance with 2013 amounts, and anticipate 2014 when annual limits are banned.
If you furnish a stand-alone HRA: Confirm the HRA plan design meets the definition of one of the five HRAs excluded from annual limit requirements. See: Annual and Lifetime Limits for HRAs.
3. Summary of Benefits & Coverage (SBC).
The Summary of Benefits and Coverage (SBC) is a required, easy-to-understand summary of the benefit. Generally speaking, your insurance company, HRA provider, or third-party administrator will provide the SBC. Give the SBC to eligible participants at least thirty (30) days before plan year begins.
4. Decide Your “Play or Pay” Strategy for 2014.
Starting January 1, 2014, PPACA requires all applicable big employers (50+ FTE employees) to either provide qualified, affordable medical insurance or pay a penalty based on full-time employees.
If you have at least 50 full time equivalent employees, administer a cost test to decide if you will play, pay, or play differently:.
Play: Provide a qualified, competitively priced group health insurance plan.
Pay: Elect to not provide a group medical insurance plan, and pay applicable fees.
Play Differently: Opt to not offer a group medical insurance plan, pay penalties, and offer a defined contribution major medical (aka a stand-alone HRA).
IMPORTANT: Employers with less than 50 FTE employees are immune to this requirement. For employers with less than 50 FTE, the “play differently” allows a business to offer a cost-effective health benefit, and take advantage of the individual premium tax subsidies.
5. W-2 Reporting Requirements.
Setting in motion with the 2012 tax year, companies with 250 or more W-2 Form Employees must report the aggregate cost of employer-sponsored group health coverage on employees’ W-2 Forms. Determine if this requirement applies to you. W-2 filing for smaller employers, and for stand-alone HRAs, is optional until further guidance is issued.
6. Sixty (60) Day Notice of Plan Changes.
A health insurance or issuer must provide 60 days advance notice of any mid-year “material modifications” to the plan. Notice can be provided in an updated SBC or a separate summary of material modifications.
7. Notice of Coverage Options through the Marketplaces.
Employers must provide written notice to all current employees (regardless of full-time/part-time status) about coverage alternatives through the Marketplaces by October 1, 2013. The Department of Labor has provided two designs employers can use: one for businesses offering a group health plan, and one for companies not offering a group health plan.
8. CER Plan Fees.
PPACA created the Patient-Centered Outcomes Research Institute (PCORI) to help patients, clinicians, payers, and the public make informed health decisions by advancing comparative effectiveness research. The Institute’s research is to be funded, in part, by fees paid by major medical issuers and sponsors of self-insured health insurance. These fees are called comparative effectiveness research fees or CER plan fees.
Self-funded plans and major medical issuers (including stand-alone HRAs) have to pay a $1 per covered life fee for comparative effectiveness research. Fees are effective for plan years ending on or after Oct. 1, 2012. Fees increase to $2 the next year and will be indexed for inflation after that. Full payment of the research fees will be due by July 31 of each year. It will ordinarily cover plan years that end during the prior calendar year.