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The Affordable Health Care Act
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The Affordable Health Care Act

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A summary of the Affordable Health Care Act with a focus on those provisions that are effective in the next two years.

A summary of the Affordable Health Care Act with a focus on those provisions that are effective in the next two years.

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  • Retiree re-insurance program provides $5 billion to reinsure plan sponsors (employers or employee organizations) that offer health insurance coverage for early retirees for claims that exceed $15,000 and are less than $90,000 per retiree (to be adjusted annually for inflation) – this caps out at $5 billion – first come first serve pay basis

Transcript

  • 1. David Whaley, Esq. Dinsmore & Shohl LLP Cincinnati 513.977.8554 [email_address] Health Care Reform Key Provisions for Employers to Think About Now
  • 2. Two Bills
    • Patient Protection and Affordable Care Act (Senate Bill)
    • Health Care and Education Affordability Reconciliation Act of 2010 (Reconciliation Bill)
    • Complicating factors
      • No significant legislative history
      • Much enforcement/rulemaking delegated to HHS
      • Uncertainty: delayed effective dates and potential future changes
  • 3. Key Concepts
    • Individual Provisions
    • Employer Provisions
    • Health Insurance Market
  • 4. Key Effective Dates
    • Now
    • Plan Years beginning after 6 months from enactment (9/23/2010 – this is January 1, 2010 for calendar year plan years)
    • 1/1/2011
    • 24 months after enactment
    • 2013*
    • 2014*
    • Later*
    • *Various dates and questions exist whether these effective dates, and requirements will be modified by subsequent legislation
  • 5. Is your Plan “Grandfathered”?
    • Grandfathered plans are exempt from certain requirements
    • Was any individual enrolled on March 23, 2010?
    • Grandfather treatment lasts indefinitely
    • May enroll new participants
    • Are plan changes permissible?
  • 6. Effective Now
    • Small Business Tax Credits
    • Retiree Reinsurance
    • Automatic enrollment
  • 7. Small Business Tax Credit
    • Available in 2010 – 2013 taxable years
      • After 2013 only available if insurance is purchased through exchange
    • Available to an “eligible small employer”
      • No more than 25 FTEs employed during the tax year
        • Phase out if FTEs >10
      • Average wages of < $50,000
        • Phase out if exceed $25,000
      • Pays premiums under a “qualifying arrangement”
        • Maximum credit is generally 35% of employer expenses
      • IRS Webpage: http://www.irs.gov/newsroom/article/0,,id=220809,00.html?portlet=6
  • 8. Retiree Reinsurance
    • HHS to establish by 6/21/2010
    • Reimburses employers for early retiree health coverage
      • Age 55 or older
      • Not eligible for Medicare
      • Includes dependents
    • Must implement HHS cost savings measures
    • Limited to $5 billion
  • 9. Automatic Enrollment (grandfathered plans exempted)
    • Applies to employers with >200 employees
    • All full time employees must be automatically enrolled in coverage
    • Will be provided ability to opt out
    • Appears to be effective now (no effective date in bill)
    • Questions:
      • Determining full time status
      • Time period for opt out
      • Return of employee contributions
      • Changes to cafeteria plan rules
  • 10. 6 Months after Enactment (all plans)
    • Plan Years after September 23, 2010
      • Extension of coverage to adult children
      • Elimination of preexisting condition exclusions for under age 19
      • Emergency care requirements
      • Restriction on coverage rescissions
      • No annual or lifetime limits
  • 11. Coverage of Children and Dependents
    • If plan covers dependent children, then coverage must be provided for adult children to age 26
      • Applies to married children
      • For grandfathered plans, through 2013, requirement ends if individual is eligible for employer coverage
      • Not required to provide coverage to spouse or dependents of child
      • Did not change IRC Sec. 152 dependent definition
      • Applies to married children, but not to spouses or dependents of children
  • 12. Coverage of Children and Dependents
    • Effect of change
      • Elimination of student status requirement?
        • Would avoid compliance with Michelle’s law
      • May plan charge additional premium?
        • Interim Final Regulations – clarify that you may not charge more for this coverage
      • Effect on COBRA - q ualifying event includes “child ceasing to be a dependent child”
        • The Interim Final Regulations seem to indicate that ceasing to be an eligible employee after age 26 is a qualifying event entitling the child to COBRA of 36 months
  • 13. Coverage of Children and Dependents
    • IRS Notice 2010-38 issued on 4/27/2010
      • Provided guidance on tax treatment of adult children
      • Tax rules effective 3/30/2010
      • Note: applies to children under age 27 (e.g can cover until last day of year when child turns 26)
        • “ child” includes son, daughter, stepson or stepdaughter
          • Also includes child legally adopted or placed for adoption
          • Includes “eligible foster child”
  • 14. Coverage of Children and Dependents
    • IRS Notice 2010-38
      • 105(b) exclusion from income applies to coverage of adult children
        • Includes children who are not dependents
        • Age limit, residency and support tests of §152 don’t apply
        • Also applies to FICA and FUTA
        • Exclusion ends on 1 st day of the year the child turns 27
  • 15. Coverage of Children and Dependents
    • IRS Notice 2010-38
      • Cafeteria plan may allow employees to make election change
        • Plans may permit effective 3/30/2010
        • May adopt retroactive amendment by 12/31/2010
  • 16. Coverage of Emergency Services (all plans)
    • Emergency
      • May apply deductible/co-payments
      • No pre-authorization requirement
      • No out-of-network charges
  • 17. Restriction on Annual and Lifetime Limits (all plans)
    • Lifetime limits
      • What if former participant has already met limit?
    • Annual limit
      • Applies only to “essential” benefits
      • May impose “restricted” limits
        • “ Restricted Annual Limits” permitted until 12/31/2013
    • Uncertainties
      • Definition of “essential” and “restricted”
      • Ability to apply limits to specific benefits
        • Out of network changes
        • Certain types of treatment (e.g., physical therapy)
  • 18. 6 Months after Enactment (non-grandfathered plans)
    • Insured plans subject to 105(h) discrimination requirements
    • Preventive care covered with no cost sharing
    • Designation of OB/GYN or pediatrician as primary care provider
    • Enhanced appeals procedure
  • 19. Section 105(h) Nondiscrimination Rules (grandfather plans exempt)
    • Discriminatory plan
      • Plan may not discriminate in favor of highly compensated individuals as to
        • Eligibility to participate, or
        • Benefits provided
    • Formerly applied only to self-insured plans
  • 20. Coverage of Preventive Services (grandfather plans exempt)
    • Preventive
      • Does not apply to grandfathered plans
      • First dollar coverage required for
        • Evidence based preventive care
        • Immunizations
  • 21. Appeals Requirements (grandfather plans exempt)
    • Plans must establish an internal claims appeals process that
      • provides notice in a culturally and linguistically appropriate manner
      • allows claimants to
        • review their file,
        • present evidence and testimony as part of the appeals process, and
        • receive continued coverage pending the outcome of the appeals process; and
      • provides an external review process
  • 22. January 1, 2011
    • Elimination of over the counter medicines from HSA, FSA and HRAs
    • Employers must report cost of health coverage on W-2
    • Provide information about CLASS program
  • 23. No Reimbursement for Over-the-Counter Drugs
    • Effective 1/1/2011 (regardless of plan year)
      • Reimbursement from FSA or HRA permitted for expenses incurred before 1/1/2011
      • HSA distribution must occur before 1/1/2011
    • Applies to FSAs, HSAs and HRAs
    • Will require amendment to plan and SPD
  • 24. W-2 Reporting
    • Employer must report total cost of health plan on 2011 Form W-2
    • Cost calculated under rules similar to COBRA costs
    • Not clear how to determine value of
      • On-site medical clinics
      • Screenings
  • 25. CLASS Program
    • New government long term care insurance program
    • Payments begin 2011
    • Employers expected to automatically enroll employees
      • Opt out available
    • Benefits available after 5 years of participation
  • 26. 24 Months after Enactment
    • 60 day advance notice of changes to benefits
    • Summary of benefits provided to all participants
    • Reporting on quality of care and wellness initiatives
    • Insurer fee for comparative effectiveness research (9/30/12)
  • 27. 2013
    • FSA Contributions limited to $2500
    • Employers must provide notice about health insurance exchange and availability of credits
  • 28. 2014
    • Plan Design Changes
    • Individual Mandates
    • Individual Subsidies
    • Employer Penalties
    • Health Insurance Exchanges
    • Small Group Subsidies
    • Insurance Market Reforms
    • Insurance Company Fee
  • 29. Later
    • Increases in individual penalty (2014 – 2018)
    • Large employers added to exchange (2017)
    • Tax on “Cadillac” plans (2018)
  • 30. Labor Considerations: Reasonable Break Time for Nursing Mothers
    • Amends the Fair Labor Standards Act
    • Requires employers to provide nursing mothers, up to one year after the birth of the child, a reasonable break time each time the mother needs to express milk
    • Area needs to be shielded from view with no intrusion by the public
    • Does not preempt state law
  • 31. Labor Considerations: Non-Discrimination Provisions
    • PPACA also amends the Fair Labor Standards Act to:
      • prohibit discharging or discriminating against an employee because the employee received a federal tax credit or cost-sharing subsidy to purchase health insurance; or
      • because he or she brings a complaint or testifies, etc. about a reasonable belief regarding a violation of PPACA
  • 32. David A. Whaley, Esq. 513.977.8554 | [email_address]