David Whaley, Esq. Dinsmore & Shohl LLP Cincinnati 513.977.8554 [email_address] Health Care Reform Key Provisions for Empl...
Two Bills <ul><li>Patient Protection and Affordable Care Act (Senate Bill) </li></ul><ul><li>Health Care and Education Aff...
Key Concepts <ul><li>Individual Provisions </li></ul><ul><li>Employer Provisions </li></ul><ul><li>Health Insurance Market...
Key Effective Dates <ul><li>Now </li></ul><ul><li>Plan Years beginning after 6 months from enactment (9/23/2010 – this is ...
Is your Plan “Grandfathered”? <ul><li>Grandfathered plans are exempt from certain requirements </li></ul><ul><li>Was any i...
Effective Now <ul><li>Small Business Tax Credits </li></ul><ul><li>Retiree Reinsurance </li></ul><ul><li>Automatic enrollm...
Small Business Tax Credit <ul><li>Available in 2010 – 2013 taxable years </li></ul><ul><ul><li>After 2013 only available i...
Retiree Reinsurance <ul><li>HHS to establish by 6/21/2010 </li></ul><ul><li>Reimburses employers for early retiree health ...
Automatic Enrollment (grandfathered plans exempted) <ul><li>Applies to employers with >200 employees </li></ul><ul><li>All...
6 Months after Enactment (all plans) <ul><li>Plan Years after September 23, 2010 </li></ul><ul><ul><li>Extension of covera...
Coverage of Children and Dependents <ul><li>If plan covers dependent children, then coverage must be provided for adult ch...
Coverage of Children and Dependents <ul><li>Effect of change </li></ul><ul><ul><li>Elimination of student status requireme...
Coverage of Children and Dependents <ul><li>IRS Notice 2010-38 issued on 4/27/2010 </li></ul><ul><ul><li>Provided guidance...
Coverage of Children and Dependents <ul><li>IRS Notice 2010-38 </li></ul><ul><ul><li>105(b) exclusion from income applies ...
Coverage of Children and Dependents <ul><li>IRS Notice 2010-38 </li></ul><ul><ul><li>Cafeteria plan may allow employees to...
Coverage of Emergency Services (all plans) <ul><li>Emergency </li></ul><ul><ul><li>May apply deductible/co-payments </li><...
Restriction on Annual and Lifetime Limits (all plans) <ul><li>Lifetime limits </li></ul><ul><ul><li>What if former partici...
6 Months after Enactment (non-grandfathered plans) <ul><li>Insured plans subject to 105(h) discrimination requirements </l...
Section 105(h) Nondiscrimination Rules (grandfather plans exempt) <ul><li>Discriminatory plan </li></ul><ul><ul><li>Plan m...
Coverage of Preventive Services (grandfather plans exempt) <ul><li>Preventive  </li></ul><ul><ul><li>Does not apply to gra...
Appeals Requirements (grandfather plans exempt) <ul><li>Plans must establish an internal claims appeals process that </li>...
January 1, 2011 <ul><li>Elimination of over the counter medicines from HSA, FSA and HRAs </li></ul><ul><li>Employers must ...
No Reimbursement for Over-the-Counter Drugs <ul><li>Effective 1/1/2011 (regardless of plan year) </li></ul><ul><ul><li>Rei...
W-2 Reporting <ul><li>Employer must report total cost of health plan on 2011 Form W-2 </li></ul><ul><li>Cost calculated un...
CLASS Program <ul><li>New government long term care insurance program </li></ul><ul><li>Payments begin 2011 </li></ul><ul>...
24 Months after Enactment <ul><li>60 day advance notice of changes to benefits </li></ul><ul><li>Summary of benefits provi...
2013 <ul><li>FSA Contributions limited to $2500 </li></ul><ul><li>Employers must provide notice about health insurance exc...
2014 <ul><li>Plan Design Changes </li></ul><ul><li>Individual Mandates </li></ul><ul><li>Individual Subsidies </li></ul><u...
Later <ul><li>Increases in individual penalty (2014 – 2018) </li></ul><ul><li>Large employers added to exchange (2017) </l...
Labor Considerations: Reasonable Break Time for Nursing Mothers <ul><li>Amends the Fair Labor Standards Act  </li></ul><ul...
Labor Considerations: Non-Discrimination Provisions <ul><li>PPACA also amends the Fair Labor Standards Act to: </li></ul><...
David A. Whaley, Esq. 513.977.8554  |  [email_address]
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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.

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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
  • The Affordable Health Care Act

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

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