Health Care Reform Update for Businesses – December 2011

Compliance with Non-Discrimination RequirementsHeal;th Care Reform Update for Businesses - December 2011

One of the provisions in the Affordable Care Act states that insured group health plans must comply with nondiscrimination requirements including rules that the plan does not discriminate in favor of highly compensated individuals as to eligibility to participate.

What Businesses Need to Know about Non-Discrimination Requirements

The IRS issued a notice on December 22nd, 2010 which provides that employers will not be subject to penalties regarding compliance with nondiscrimination provisions until after administrative guidance of general applicability has been issued.  The IRS delay in the effective date of nondiscrimination rules will allow insured group health plan sponsors time to implement any changes required as a result of the regulations or other guidance.


 

CLASS Act (Community Living Services and Supports Act)

The CLASS Act became law when President Obama signed the Patient Protection and Affordable Care Act on March 23, 2010.  It is a government sponsored long term care plan that offers a basic level of guaranteed issue coverage to working Americans. In a Senate hearing in February 2011, the HHS Secretary said that the original version of the CLASS Act was “totally unsustainable.”

What Businesses Need to Know about the CLASS Act:

The effective date of the law was January 1, 2011, although it was not operational then.  The HHS Department had until October 1, 2012 to design the CLASS benefit plan.  In October 2011, the Obama administration pulled the plug on the CLASS Act stating that it could not meet three important criteria: be self-sustaining, financially sound for 75 years and affordable to consumers.


 

Automatic Enrollment in Health Plans

The Affordable Care Act amended the Fair Labor Standards Act by adding a new section requiring employers with more than 200 full-time employees to automatically enroll new full-time employees in the employer’s health plan and continue enrollment of current employees.

What Businesses Need to Know about Automatic Enrollment in Health Plans

The Department of Labor has said that until regulations are issued, employers are not required to comply with this rule.  The Department of Labor has to gather the information necessary to develop rules for this provision and intends to complete this rulemaking by 2014.


 

W-2 Reporting Requirement

Starting in tax year 2011, the Affordable Care Act requires employers to report the value of the health insurance coverage they provide employees on each employee’s annual Form W-2.

What Businesses Need to Know about the W-2 Reporting Requirement

On October 12, 2010 the IRS announced that it will delay the compliance date for this requirement.   The IRS and the Treasury Department have delayed the compliance date so that employers can have more time to make changes to their payroll systems or procedures in preparation for compliance with this requirement.  Employers will have to include this information for the first time on the 2012 W-2s which are not issued until 2013. The W-2 reporting is for informational purposes only, to show employees the value of their health care benefits so they can be more informed consumers.  If a company issues fewer than 250 Forms W-2 for 2011 – ex., the forms that you send to employees and SSA in early 2012 – then in 2012 a company is relieved from tracking and reporting the value of group health care coverage on Forms W-2.

 

 

1099 Reporting Requirement

A provision in the health care law mandates that beginning in 2012 all companies will have to issue 1099 tax forms not just to contract workers but to any individual or corporation from which they buy more than $600 in goods or services in a tax year.

What Businesses Need to Know about the 1099 Reporting Requirement

On February 2, 2011 the U.S. Senate repealed the 1099 reporting requirement.  On March 3, 2011 the U.S. House repealed the 1099 reporting mandate.  President Obama highlighted the new 1099s filing requirement in his State of the Union address, noting that it would place an “unnecessary bookkeeping burden on small businesses.”

 

Summary of Benefits and Coverage

The Affordable Care Act states that not later than 24 months after the date of enactment, if a group plan or issuer makes any material modification in any terms of their plan or coverage that is not reflected in the most recently provided Summary of Benefits and Coverage, impacted enrollees must be provided with a 60-day advance written summary of the modifications.  The Secretary of Health and Human Services is supposed to develop standards for compliance by March 23, 2011 and notices will be required by March 23, 2012.

What Businesses Need to Know about the Summary of Benefits and Coverage

On August 17, 2011, the Departments (HHS, Labor and the Treasury) proposed new rules under the Affordable Care Act that will require health insurers and employers to provide policyholders and employees a Summary of Benefits and Coverage which which show health benefits, coverage and costs in plain English.  As of November 22, 2011, the deadline (March 23, 2012) for the summary of benefits and coverage implementation has been extended.

 

See our Focus Benefits Flash on the Summary of Benefits and Coverage.

 

Preventive Care Services for Women

Last summer, the Department of Health and Human Services (HHS) released rules under the Affordable Care Act requiring all new health plans to cover various evidence-based preventive services like mammograms, colonoscopies, blood pressure checks and childhood immunizations without cost-sharing.

What Businesses Need to Know about Preventive Care Services for Women

On August 1, 2011 the Department of Health and Human Services (HHS)  issued rules for preventive care requirements for women under the Affordable Care Act.  HHS asked the independent Institute of Medicine (IOM) to conduct a scientific review and provide recommendations on specific preventive measures that consider the unique health needs of women throughout their lifetime.

 

See our Focus Benefits Flash on Preventive Services for Women.


New health plans will need to includes these services without cost sharing for insurance policies with plan years beginning or or after August 1, 2012.  Grandfathered plans doe not need to comply with the preventive care requirements.        
                                         
Flexible Spending Accounts Contributions Limited to  $2,500 in 2013
In 2013, the health care reform law will limit the amount of money you can put away in a flexible spending account (FSA) to $2,500 a year with annual increases reflecting cost of living adjustments.  FSAs are a great way to pay for healthcare expenses using pre-tax money.  Expenses such as  immunizations, prescription eyewear, and braces can be funded with a FSA.
What Businesses Need to Know about Flexible Spending Accounts Contributions being Limited
If employees have been putting off expensive things like laser eye surgery or braces, they might want to think about doing these things in 2012.  Remember the “use it or lose it” rules – the amount that is placed in a FSA expires at the end of the year
                                                                                                                                 
                                                                                                                                                                                                                                 
Retroactive Termination of Health Insurance Coverage
PPACA prohibits health insurance carriers and group health plans from rescinding coverage except in cases
involving fraud or intentional misrepresentation of material fact.  This provision affects all plans that are subject to the health care reform law, regardless of grandfathering status and is in effect as of each plan’s first renewal or effective date after September 23, 2010.
What Businesses Need to Know about Retroactive Termination of  Coverage

Plan sponsors cannot terminate coverage effective with a date in the past if:

  • An individual was covered through plan error, and
  • An individual paid premium or contributed to the cost of the plan.

In these cases, a member’s coverage can only be terminated with a future effective date of termination.

Plan sponsors may terminate coverage retroactively if:

  • The individual did not pay any premium or contribution for coverage past the termination date.
  • The individual makes an intentional misrepresentation of material fact.  A 30-day written notice is required when coverage is be rescinded.

 

 

Focus Benefits will continue to keep you updated on the health care reform legislation and how it impacts your business.  This Focus Benefits Flash is provided for informational purposes only.  It is not intended as legal or regulatory advice.  The federal government is continuing to issue notices and interim final rules to clarify sections of the Patient Protection and Affordable Care Act and information is subject to change at any time as regulations are being issued.


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