Legislative Update – August 2012
1.) U.S. Supreme States that Health Care Reform Law is Constitutional – June 2012
The Supreme Court’s decision on June 28, 2012 to uphold President Obama’s health care reform law will go down in the history books as a crucial point for health care access in the United States. In a 5-4 decision, Chief Justice Roberts stated that the taxing clause of the Constitution allows Congress to impose the individual mandate penalty payment requirement. Regarding Medicaid expansion, the Court stated that Congress cannot penalize states that choose not to participate in a new program by taking away their existing Medicaid funding.
2.) Preventive Care for Women – August 1, 2012
Under the Affordable Care Act, women’s preventive health care services – such as mammograms, screenings for cervical cancer and other services – are already covered with no cost sharing for new health plans. On August 1, 2011 the Department of Health and Human Services (HHS) issued new guidelines regarding preventive care requirements for women.
New health plans will need to include the following services listed below without cost sharing for insurance policies with plan years beginning on or after August 1, 2012: well woman visits, screening for gestational diabetes, human papillomavirus (HPV) DNA testing for women 30 years and older, sexually transmitted infection counseling, human immunodeficiency virus (HIV) screening and counseling, FDA – approved contraception methods and contraceptive counseling, breastfeeding support, supplies and counseling and domestic violence screening and counseling.
Grandfathered plans do not have to comply with the preventive care requirements. The health care reform law gives religious and/or non-profit organizations an option to exclude contraception coverage from their benefits plans. This exemption only applies to group health plans and does not apply to policyholders of individual plans.
3.) Ready for the Summary of Benefits and Coverage? – September 23, 2012
Health care reform law requires group health plans and health insurers to issue a Summary of Benefits and Coverage (SBC) and a uniform glossary of terms which will provide consumers detailed information about their health plan benefits and coverage. The SBC provision goes into effect September 23, 2012 for individual coverage and for group plan enrollment periods that begin on or after September 23, 2012. The federal government has stated that during the first year of applicability, no penalties will be imposed on plans and issuers that are working in good faith to comply with the requirements.
For additional information see our post: The Latest Guidance on the Summary of Benefits and Coverage.
4.) Medical Loss Ratio Rebates – August 1, 2012
The Medical Loss Ratio rule states that insurance companies in the individual and small group markets must spend at least 80% of the premium dollars they collect on medical care and quality improvement activities and insurers in the large group market must spend at least 85% of premium dollars on medical care and quality improvement activities. Insurers not meeting the medical loss ratio standards will be required to provide rebates to their consumers. Rebates to consumers will be mailed to consumers on or before August 1, 2012.
For additional information including how employers should distribute the rebate see our latest post: Medical Loss Ratio Rebate Overview for Employers.
5.) Comparative Effectiveness Research Fees – October 1, 2012
The health care reform law created a Patient-Centered Outcomes Research Institute which will help patients, doctors, purchasers and others make informed health decisions by distributing comparative clinical research findings. The Affordable Care Act mandates that health insurers and self-funded health plan sponsors pay a fee each policy or plan year ending on or after October 1, 2012 and before October 1, 2019 in order to fund the Institute. The research fee is $1 for the first plan year multiplied by the average number of covered lives. The fee raises to $2 in 2013. In 2014 the research fee is increased based on increases in national health care expenditures.
Additional information can be found in our post: Research Fees to be Imposed on Health Plans Starting October 2012.
6.) W-2 Reporting Requirements for Employers – January 2013
Employers who issue more than 250 Forms W-2 are required to report the aggregate cost of health care coverage covering the 2012 year, and W-2 Forms will be due in January 2013. The purpose of the reporting is to provide employees useful consumer information about the cost of their health care coverage. Since we are halfway through 2012, it is critical that employers with more than 250 Forms W-2 have a system set up to track aggregate health care costs. An employer who was required to file fewer than 250 Forms W-2 for 2011 will be exempt from the reporting requirement for 2012.
Additional information for employers can be found in our post: W-2 Reporting Update for Employers.
7.) FSA Contributions Limited to $2,500 – January 2013
The Affordable Care Act (ACA) set a $2,500 annual limit on the amount of employee contributions to a health flexible savings account (FSA). The reform law limit on the amount that employees may make to a FSA is scheduled to take effect in 2013. The $2,500 contribution limit does not apply for plan years beginning before 2013. The $2,500 limit applies separately to each employee. A husband and wife may each contribute up to $2,500 to a FSA even if they both work for the same employer and are participants in the same health FSA.
For additional information see our post: IRS Releases Guidance on $2,500 Health FSA Limit.
8.) Employer Mandate to Provide Coverage – 2014
Beginning in 2014, employers with more than 50 full-time employees will be subject to a penalty of $2,000 per employee per year if they do not provide group health insurance (the first 30 employees are exempt). If employers do not offer coverage that is affordable and does not provide minimum value to its employees and if one of their employees receives a premium tax credit through the state exchanges, then there is a penalty of $3,000 per employee per year for each employee receiving a tax credit up to a maximum of $2,000 times the number of full-time employees (the first 30 employees are exempt).
More information can be found on our post: Employers Beware: Pay or Play Mandates Starting in 2014.
9.) Auto Enrollment Mandate – 2014 (Currently Delayed)
The health care reform law stated that employers with more than 200 full-time employees are required to automatically enroll new full-time employees in the employer’s health benefit plan and that employees must opt out if they do not want health insurance coverage. In February 2012, the Department of Labor stated that until such rules are finalized, employers are not required to comply with this provision.
10.) Non-discrimination Requirements for Insured Health Plans (Currently Delayed)
This provision of the Affordable Care Act stated that if an employer sponsors an insured plan that discriminates in favor of highly compensated individuals with respect to either eligibility or benefits, then they are subject to at least a $100 per day penalty multiplied times the number of individuals discriminated against. The provision was supposed to be effective September 23, 2010. In January 2011, the IRS announced that they will be delaying the enforcement of this provision. The IRS has stated that this rule will not be enforced until after regulations or other administrative guidance of general applicability has been issued.
The full effects of the health care reform law on employers will not be fully known until the federal government releases all of the final set of regulations under the Affordable Care Act. The presidential election in November will have a big impact on the law and whether some of these regulations get changed or delayed. The information contained in this Focus Benefits Flash is provided as general guidance only and is not intended to be legal or other professional advice. The provisions with health care reform are constantly changing and guidelines may change as updates are issued by the federal government.