Health Reform
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Summary
This presentation will introduce you to the pressing
issues concerning the Patient Protection and
Affordable Care Act signed into law March 2010
Our goal is to help you better understand the impact
this will have on you and your business, and to let
you know how we may be able to assist you
Information in this presentation is not considered
exhaustive nor is it considered legal advice
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Currently On-going
Grandfathered
Health Plans
Employer Subsides of Medicare D
Minimum Loss Ratios
Adoption Coverage
Breaks for Nursing Mothers
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Grandfathered Health Plans
Overview
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A grandfathered health plan is any plan in which at least one individual
was enrolled on March 23, 2010, and the policy or plan must have
continuously covered someone since that date.
Grandfathered plans remain subject to:
Mental Health Parity provisions
Newborns’ and Mother’s Health Protection Act provisions
Women’s Health and Cancer Rights Act
Michelle’s Law
If an employer offers multiple health plan options, each option is treated
separately in terms of its grandfathered status
Grandfathered plan rules are not limited to individuals enrolled on the
date of enactment but rather
•
•
New employees (and their families) may be covered under an
employer’s grandfathered plan
Family members of current employees who are covered by the
grandfathered plan may also be added, if their enrollment was
permitted under plan terms on March 23, 2010
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Grandfathered health plans are exempt from various
provisions of the health reform law, including:
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Coverage of preventive services without cost-sharing
Cost-sharing limits
Insured group health plan nondiscrimination rules
Claims appeals and review process
Selection of doctors and referral requirements
Coverage of clinical trials
No discrimination against providers
In addition, an exception is made for employers that
have scheduled plan changes as a result of a
collective bargaining agreement
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Keeping Grandfathered Status
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Individuals and employer group plans that wish to keep their current policy on a
grandfathered basis would only be able to do so if the only plan changes made were
to add or delete new employees and any new dependents.
Regulation allows for changes in plan benefit structure, except for the following:
• Eliminating all or substantially all benefits to diagnose or treat a particular
condition
• Increasing a coinsurance or other percentage-based cost-sharing requirement
above the level in effect on March 23, 2010
• Increasing a fixed-dollar cost-sharing requirement, such as annual deductible or
out-of-pocket limit, by total percentage – measured from march 23, 2010 – that
exceeds the sum of the medical inflation rate plus 15% points
• Increasing co-payment by an amount exceeding greater of
• The amount just described for other fixed-amount cost-sharing requirements
• $5 increased by the medical inflation rate since March 23, 2010.
• Decreasing rate of employer contributions to the plan (for any tier, such as
employee-only or family) by more than 5% points below rate that was effect on
March 23, 2010
• Adopting or decreasing an annual benefit limit, with the specific rules depending
on whether the plan had already imposed an annual or lifetime limit as of March
23, 2010
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Provisions applicable to all group health plans as of
the law’s relevant effect date, regardless of
“grandfathered” status, include:
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Coverage of adult children up to age 26
(grandfathered group health plans do not have to
comply with this requirement until the first plan year
beginning on or after January 1, 2014, if the adult child
is eligible for coverage under another eligible
employer-sponsored health plan)
Lifetime/annual limit restrictions
Rescission restrictions
Preexisting condition exclusions
90-days waiting period limit
Uniform summary of benefits
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Keeping Grandfathered Status
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As of now, other types of benefit modifications will not
cause a loss of grandfathered status.
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Example: the regulation’s preamble asks for comments on
whether changing a plan’s network provider, changing from
an insured to a self-funded plan, or changing a prescription
drug formulary should be added as events causing a loss of
grandfathered status. The preamble assures us that any
such change in the regulation would be applied only
prospectively
The regulations provide that the grandfathering rules apply
separately to each “benefit package” made available under
a health plan. Thus, a plan offering both an HMO and
PPO option might choose to modify the PPO’s deductible
or co-payment in a way that would cause the PPO to lose
its grandfathered status, without thereby forfeiting the
HMO’s grandfathered status.
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Keeping Grandfathered Status
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Implies that, beginning in 2014, premiums can vary more
widely for grandfathered plans than for non-grandfathered
plans for employers with up to 100 employees
Plan sponsors that have decided to maintain
grandfathered status must provide participants with a
statement that the plan intends to preserve the basic
health coverage that was in effect on March 23, 2010, and
that some of the consumer protections of the Act may not
apply. In addition, to maintain status as a grandfathered
plan, the plan sponsor must retain records of the plan
terms in existence on March 23, 2010, including plan
documents, insurance policies, summary plan descriptions
(SPDs), and other cost-sharing documentation.
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Grandfathered Provision:
Transition Rules
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For plans that made changes prior to March 23, 2010 (even if
they take effect after March 23, 2010), grandfather status is
retained if such changes were adopted pursuant to a legally
binding contract, insurance filing, or written plan amendment.
For plans that made routine changes between March 23, 2010
and June 17, 2010, a good faith compliance standard will be
applied and any changes that only modestly exceed any
grandfather requirements will be allowed for the current plan
year. The good faith standard has been extended until July 1,
2011
For plans that made significant changes prior to June 17, 2010
that would cause them to lose grandfathered status are allowed
a grace period lasting until the start of the next plan year
beginning after September 23, 2010 to bring their coverage
terms in compliance with PPACA.
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Grandfathered Plan Summary
Chart
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Summary of 2010-2014 changes
(see handout)
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Employer Subsidies of
Medicare Part D Premiums
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Eliminates the deduction for the subsidy to
employers who maintain prescription drug plans for
their Medicare Part D eligible retirees.
In order for coverage to be available under this part
for covered part D drugs of a manufacturer, the
manufacturer must:
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Participate in the Medicare coverage gap discount
program under section 1860D-14A
Have entered into and have in effect an agreement
described in subsection (b) of such section with the
Secretary
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• Have entered into and have in effect, under terms
and conditions specified by the Secretary, entered
into a contract with under subsection (d)(3) of
such section:
• (b) Effective date – shall apply to covered part D drugs
• (c) Authorizing coverage for drugs not covered under
agreement - subsection (a) shall not apply to the
dispensing of a covered part D drug if:
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The Secretary has made a determination that the
availability of the drug is essential to the health of
beneficiaries under this part; or
The Secretary determines that in the period beginning on
July 1, 2010, and ending on December 31, 2010, there
were extenuating circumstances.
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Minimum Loss Ratios
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Health plans, including “grandfathered plans”, must
annually report on the share of premium dollars spent on
medical care and provide consumer rebates for excessive
medical loss ratios. (regulatory process starts 2010)
• Applies to “issuers” not employers directly
• Administered by the HHS
• States are permitted to set higher MLR standards
• Self insured plans are exempt
The amendment made by this section shall apply to
taxable years beginning after December 31, 2009
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The minimum loss ratios are as follows:
• 85% for large group plans (101 or more employees)
• 80% for small group plans (100 or less employees)
• 80% for individual plans
Carriers must issue rebates to each enrollee on a pro rata
basis for plans that that fail to meet MLR requirements
starting in 2011.
By December 31, 2010, the NAIC is required to establish:
• Uniform definitions
• Standard MLR calculation methodology
• Rebate calculation methodology
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Adoption Coverage
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Limit for employer sponsored assistance for
adoptions increase from $10,000 to $13,170
Employee may exclude QAE from gross income
that is reimbursed under employer provided
program
Credit is extended through 2011
Phased out for high income earners starting at
$182,000
Tax payer may file an amendment to claim credit
for QAE for 2008 and 2009
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Breaks for Nursing Mothers
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All employers with 50 or more employees to provide
private areas (not restrooms) where mothers of children
less than one year old can pump breast milk in private
Employers must provide “reasonable” unpaid time for this
Smaller employers may be exempted if undue hardship
can be demonstrated
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Health Reform
2010
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Summary
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Non-Discrimination Testing
Early Retiree Re-insurance
Pre-existing Conditions
Increase in Dependent Coverage
OBGYN Non Referral Provision
Coverage of Preventive Care
Coverage Appeals Process
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Summary
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Wellness Grants
Tanning Tax
HSA and MSA Tax
Emergency Service Coverage
Designation of Primary Care Doctor
Web Based Information Portal
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Non-Discrimination Testing
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Requires all group health plans to comply with current
IRC § 105(h)(2) rules that prohibit discrimination in favor
of highly compensated individuals in terms of eligibility
and benefits.
All non-Grandfathered plans must pass discrimination
testing similar but not exactly like other cafeteria plans.
Under the new nondiscrimination rules, fully insured
group health plan need to meet these requirements:
• It cannot discriminate in favor of highly compensated
individuals
• It must demonstrate that it benefits at least 70% of all
employees
• It cannot discriminate in favor of participants who are
highly compensated individuals
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Non-Discrimination Testing
Penalties for Non-Compliance
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$100 per day for each employee whose benefits are
not in compliance capped at 10% of the cost of the
group health plan or $500,000 which ever is less.
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Early Retiree Re-insurance
Program
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Creates a new temporary reinsurance program to help
companies (including self-funded plans) that provide early
retiree health benefits for those ages 55-64 offset the cost of
that coverage. Employers must apply to the HHS in order to
participate in this program.
The federal government will allocate $5 billion toward the
creation of a temporary reinsurance program for employersponsored early retiree coverage that will reimburse 80% of
claims between $15,000 and $90,000. The purpose of the
program is to encourage employers that currently offer
retiree medical coverage to continue to do so until the
Exchanges are up and running.
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Cumulative health benefits incurred in a given plan year and
paid for a particular early retiree that fall between those
amounts will be eligible for reimbursement (rather than
reimbursement being made only for discrete health benefit
items or services whose reimbursement total falls between
those amounts). Reimbursement will be made only for claims
that are incurred during the applicable plan year, and paid.
Thus, eligible employers can save up to $60,000 per early
retiree each year.
Eligible claims are those for individuals at least age 55 (and
their dependents) who are not eligible for Medicare and are not
active workers.
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Includes documented retiree cost-sharing (deductibles, copays,
coinsurance, etc.)
Includes medical and prescription drug claims.
Excludes HIPAA-excepted benefits (e.g., long-term care and
limited scope dental or vision benefits).
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Eligible plans must apply for the program and meet minimum
requirements for management of participants with chronic and highcost conditions. Reinsurance payments received by employers must
be used to reduce participant and/or sponsor costs. A sponsor must
be able to explain how reimbursements will be applied to maintain
its level of effort in contributing to support the plan.
Reimbursements are not treated as taxable income to the employer.
The program is effective June 1, 2010, and ends January 1, 2014,
or sooner, if funds are depleted. Sponsors may apply for plan
years that begin before June 1, 2010, but end after that date. In that
case, the amount of claims incurred before June 1, 2010 (up to
$15,000) count toward the $15,000 cost threshold and the $90,000
cost limit. The amount of claims incurred before June 1, 2010, in
excess of $15,000 is not eligible for reimbursement and does not
count toward the cost limit. The reinsurance amount to be paid is
based solely on claims incurred on and after June 1, 2010, and that
fall between the cost threshold and cost limit for the plan year.
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Pre-Existing Condition Coverage
for Individual Market
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Federal High Risk Pool for Individuals with a Pre-Existing Condition
(June 2010)
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Provides eligible individuals access to coverage that does not impose any
coverage exclusions for pre-existing health condition. This provision ends
when Exchanges are operational.
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May be administered by nonprofit organizations under contract from HHS.
No preexisting condition limitations
Plan must cover at least 65% of medical costs
Limitation on total out of pocket expenses
Rates based upon a standard population with age rating factor max of 4:1
Eligibility:
• Legal resident of the United States
• No creditable coverage six months prior to March 23, 2010 or the date on
which they apply for coverage under the pool
• Has preexisting condition, as determined in a manner consistent with
guidance issued by Secretary.
• Health plans and employers must reimburse the program if they have
discouraged individuals from being enrolled based on health status.
• 5 billion dollars appropriated to pay claims in excess of premiums.
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
As of 10/5/10, most health insurance
carriers in the state of VA have
voluntarily removed themselves from
offering health insurance for children
under the age of 19 for child only
policies. Many carriers will still write
policies assuming there is at least 1
adult on the policy.
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Eliminating Pre-Existing
Conditions Exclusion for Children
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Bars health insurance companies from
imposing pre-existing condition exclusions on
children less than 19 years of age (October
2010)
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Increases in Dependent
Coverage
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Increases the age of a dependent (regardless of status
regarding marriage, full-time student, place of residence,
or financial dependency) for health plan coverage until
the age of 26 (coverage is not provided on the
dependent’s 26th birthday) for:
Fully insured individual health plans
Fully insured group plans
Self Insured group health plans
COBRA coverage
Dependent children include: son/daughter; stepchildren;
adopted children; foster children.
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If child is eligible under these rules, and parent not
currently covered, the parent must be allowed to enroll or
switch to another plan.
For grandfathered plans until 2014, they only have to
offer to those dependents NOT eligible for other source of
employer sponsored coverage.
Transition rules say a plan or issuer must provide a
written notice to enroll within 30 days.
Nothing in this section shall be construed to modify the
definition of ‘dependent’ as used in the Internal Revenue
Code of 1986 with respect to the tax treatment of the cost
of coverage.
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
This provision generally is effective for the first plan
year beginning on or after September 23, 2010 (i.e.,
January 1, 2011, for calendar year plans), although
collectively bargained plans may have a later
effective date. Until the first plan year beginning on
or after January 1, 2014, grandfathered group health
plans are not required to extend coverage to adult
children (up to age 26) who have access to another
eligible employer-sponsored health plan (a group
health plan or group health insurance coverage
which is a governmental plan, or any other plan or
coverage offered in the small or large group market
within a State).
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OBGYN Non Referral
Provision
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General Rights
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Direct Access- A group health plan, or health insurance
issuer offering group or individual health insurance
coverage, described in paragraph (2) may not require
authorization or referral by the plan, issuer, or any person
including a primary care provider described in
paragraph(2)(B)) in the case of a female participant,
beneficiary, or enrollee who seeks coverage for
obstetrical or gynecological care provided by a
participating health care professional who specializes in
obstetrics or gynecology. Such professional shall agree
to otherwise adhere to such plan's or issuer’s policies
and procedures, including procedures regarding referrals
and obtaining prior authorization and providing services
pursuant to a treatment plan (if any) approved by the
plan or issuer.
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•
‘‘(B) OBSTETRICAL AND GYNECOLOGICAL
CARE.—A group health plan or health insurance
issuer described in paragraph(2) shall treat the
provision of obstetrical and gynecological care, and
the ordering of related obstetrical and gynecological
items and services, pursuant to the direct access
described under subparagraph (A), by a participating
health care professional who specializes in obstetrics
or gynecology as the authorization of the primary care
provider.
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Coverage of Preventive Care
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In general – a group health plan and a health insurance issuer
offering group or individual health insurance coverage shall, at a
minimum provide coverage for and shall not impose any cost
sharing requirements for:
•
1. Evidence-based items or services that have an effect a rating of ‘A’ or ‘B’ in
the current recommendations of the United States Preventive Service Task
Force;
(See handout)
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Update as of August 1, 2010
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Be sure preventive service is separate from an office
visit unless purpose of the visit is preventive in
nature
In-network ONLY
All new group health plans and plans in the
individual market must provide first dollar coverage
for preventive services
•
This provision appears to eliminate deductibles or
other cost sharing mechanisms for preventative care
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Coverage Appeals Process
Update as of July 2010
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Requires that any new group health plan or new plan
in the individual market implement an effective
appeals process for coverage determinations and
claims.
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(Update as of July 23, 2010): Under new rules, nongrandfathered heath plans must implement an internal
appeals process for denied claims that conforms to new
requirements which are MORE RIGOUROUS than those
currently required under ERISA. Furthermore, plans must
allow for an external appeals process to be utilized in the
event that the internal appeal does not yield a favorable
result for the participant.
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Coverage Appeals Process
(Internal Claims Appeal)
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A group health plan and the health insurance issuer
offering group and individual health insurance
coverage shall implement an effective appeals
process for appeals of coverage determinations and
claims for:
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1- determination of an individual’s eligibility to participate in
a plan
2- determination that a benefit is not a covered benefit
3- Imposition of a preexisting condition exclusion on
otherwise covered benefit
4- determination that a benefit is experimental,
investigational or not medically necessary
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Coverage Appeals Process
(Internal Claims Appeal)
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Plan or insurer must notify claimant of benefit
determination not later than 24 hours (if
urgent care is involved)
Claimant must be provided with new
evidence considered, rationale, notice to
enrollees, impartiality of personal involved
making the decision and reason(s) for final
determination.
Continued coverage will be provided during
internal review process.
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Coverage Appeals Process
(External Appeal Process)
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State or Federal external review can be filed
within four months of adverse internal claims
review determination
During external appeals process, the
following will be considered:
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Medical records, health professional’s
recommendation, terms of coverage, appropriate
practice guidelines, documents from health carrier
Within 45 days, written decision of
determination will be provided
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Wellness Grants
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The Secretary shall award grants to eligible
employers to provide their employees with access to
comprehensive workplace wellness programs.
The grant program established under this section
shall be conducted for a 5-year period.
The term “eligible employer” means an employer
(including a non-profit employer) that:
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•
A. employs less than 100 employees who work 25
hours or greater per week
B. does not provide a workplace wellness program as
of the date of enactment of this Act.
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An eligible employer desiring to participate in the
grant program under this section shall submit an
application to the Secretary, in such manner and
containing such information as the Secretary may
require, which shall include a proposal for a
comprehensive workplace wellness program that
meet the criteria and requirements.
For purposes of carrying out the grand program
under this section, there is authorized to be
appropriated $ 200,000,000 for the period of fiscal
years 2011-2015. Amounts appropriated pursuant
to this subsection shall remain available until
expended.
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Tanning Tax
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To help pay for the plan, a 10% tax on indoor tanning
service
Began July 2010
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HSA and MSA Tax Increases
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Increases the additional tax for HSA withdrawals prior to
age 65 that are not used for qualified medical expenses
from 10 to 20 percent. The additional tax for Archer MSA
withdrawals not used for qualified medical expenses
would increase from 15 to 20 percent.
HSAs- Section 223(f)(4)(A) of the Internal Revenue Code
of 1986 is amended by striking “10 percent” and inserting
“20 percent”.
Archer MSAs- Section 220 (f)(4)(A) of the Internal
Revenue Code of 1986 is amended by striking “15
percent” and inserting “20 percent”.
Effective Date- The amendments made by this section
shall apply to distributions made after December 31,
2010.
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Emergency Services
Coverage
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Mandates coverage of emergency services at in-network level
regardless of provider for:
• Fully-insured individual health plans
• Fully-insured group plans
• Self-insured group health plans
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Carriers only have to pay the provider at the greater level of:
• Amount you would have paid in network
• The insurance carrier’s normal reasonable and customary level
• Medicare
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Patients can be balance billed
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Designation of Medical Provider
as a Primary Doctor
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Allows for designation of any participating primary care
doctor or pediatrician as primary care doctor
No preauthorization or referral necessary for OB/GYN
services
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Web-Based Portal
Update as of July 2010
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Immediate establishment – not later than July 1,
2010, the Secretary, In consultation with the States,
shall establish a mechanism, including an Internet
website, through which a resident of any state may
identify affordable health insurance coverage options
in that State.
www.healthcare.gov
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Connecting to affordable coverage- An Internet website
established under paragraph (1) shall, to the extent
practical, provide ways for residents of any States to
receive information on at least the following coverage
option:
•
•
•
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Health insurance coverage offered by health insurance issuers,
other than coverage that provides reimbursement only for the
treatment or mitigation
Medicaid coverage under title XIX of the Social security Act.
Coverage under title XXI of the Social Security
A State health benefits high risk pool, to the extent that such
high risk pool is offered in such State; and
Coverage under a high risk pool under section 1101.
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Health Reform
2011
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Summary
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Reporting on W-2’s
Qualified Medical Expenses
Cafeteria Plan Safe Harbor
Non-Retaliation Provision
CLASS Act
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Reporting on W-2’s
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Employers must include on annual Forms W-2 the aggregate
cost of group health plan benefits (excluding FSA, HSA, or
Archer MSA contributions, or the cost of long term care, and
certain other excepted benefits) provided to employees for
taxable years beginning on or after January 1, 2012 (i.e., Forms
W-2 issued in 2013 for 2012 wages, and issued thereafter for
subsequent years).
Employers can calculate the reportable value based on a
methodology similar to that used under COBRA (minus the 2%
COBRA administrative fee, if charged). If the plan provides for
the same COBRA continuation coverage premium for both
individual coverage and family coverage, the plan would be
required to calculate separate individual and family premiums
for this purpose.
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Qualified Medical Expenses

Standardizing the Definition of Qualified Medical
Expenses.
•
Conforms the definition of qualified medical expenses for
HSAs, FSAs, and HRAs to the definition used for the
itemized deduction. An exception to this rule is included so
that amounts paid for over-the-counter medicine with a
prescription still qualify as medical expenses.
•
•
Most over the counter drug purchases will no longer qualify as
“medical expenses.”
Administrators must eliminate all coverage for over the counter
drugs or establish procedures for verifying that beneficiaries
hold valid prescriptions.
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
Increases the additional tax for HSA withdrawals
prior to age 65 that are not used for qualified medical
expenses from 10 to 20 percent. The additional tax
for Archer MSA withdrawals not used for qualified
medical expenses would increase from 15 to 20
percent.
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
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Effective for taxable years beginning on or after
January 1, 2011, OTC medications (except insulin)
that are not prescribed by a physician will no longer
be considered qualified medical expenses that can
be reimbursed through health accounts, including
health FSAs, HSAs, and HRAs.
It appears that expenses for excluded OTC
medicines that are incurred on or after January 1,
2011, would no longer be reimbursable through
health accounts (but expenses incurred before that
date could be reimbursed after that date).
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Cafeteria Plan Safe Harbor

Creates a Simple Cafeteria Plan to provide a vehicle through
which small businesses can provide tax free benefits to their
employees.
•
•
•
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Designed for business with less than 100 employees.
Broader eligibility rules which may allow owners to participate.
Employers must contribute towards cost of benefits under this plan.
The amendments made by this section shall apply to benefits and
coverage provided after the date of the enactment of this Act.
Nothing in the amendments made by this section shall be
construed to create and inference with respect to the exclusion
from gross income of benefits provided by and Indian tribe or
tribal organization that are not within the scope of this section and
benefits provided prior to the date of the enactment of this Act.
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

An eligible employer maintaining a simple cafeteria plan
with respect to which the requirements of this subsection
are met for any year shall be treated as meeting any
applicable nondiscrimination requirement during such
year.
The term ‘simple cafeteria plan’ means a cafeteria plan
•
•
Which is established and maintained by an eligible employer
Under the plan the employer is required, without regard to
whether a qualified employee makes any salary reduction
contribution, to make a contribution to provide qualified
benefits under the plan on behalf of each qualified employee in
an amount equal to a uniform percentage (not less than 2
percent) of the employee’s compensation the plan year or an
amount which is not less than the lesser of 6 percent of the
employee’s compensation for the plan year, or twice the
amount of the salary reduction contributions of each qualified
employee.
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Non-Retaliation Provisions
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
The Fair Labor Standards Act of 1938 is
amended by inserting after section 18B.
An employer may not discriminate or retaliate
against an individual on account of the fact
the individual:
•
•
Notifies the government of the employer’s violation
of the health reform laws
Qualifies for federal insurance subsidies or tax
credits
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
No limitation on Rights- nothing in this
section shall be deemed to diminish the
rights, privileges, or remedies of any
employer under any Federal or State law
or under any collective bargaining
agreement. The rights and remedies in
this section may not be waived by any
agreement, policy, form, or condition of
employment.”
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CLASS Act

The purpose of this title to establish a national voluntary insurance
program for purchasing community living assistance services and
supports in order to-
•
•
•
•
•
•
•
•
Provide individuals with functional limitations with tools that will allow them
to maintain their personal and financial independence and live in the
community through a new financing strategy for community living
assistance services and supports.
Establish an infrastructure that will help address the nation’s community
living assistance services and supports needs;
Alleviate burdens on family caregivers; and
Address institutional bias by providing a financing mechanism that support
personal choice and independence to live in the community
No underwriting allowed except for age
Administration expenses limited to 3%
No federal funds allowed (except program premiums and interest) to fund
program
Insurance industry may offer coverage through an exchange beginning
2014 and may coordinate benefits
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Health Reform
2012
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Summary




Benefits Summary
Plan Provision
Quality Information Reporting
1099 information
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Benefits Summary


Requires that all:
•
•
•
Group health plans (including self-insured plans)
Group health insurers
Individual health insurers
Provide a summary of benefits and a coverage
explanation to:
•
•
•
All applicants at the time of the application
To all enrollees prior to the time of enrollment or reenrollment
All policyholders or certificate holder at the time of
issuance of the policy or delivery of the certificate.
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




The summary must include specific information to be
determined by the Secretary of DHHS in consultation
with the National Association of Insurance
Commissioners.
It may not exceed four pages (DHHS will provide a
template) and must be linguistically appropriate.
The summary can be provided in paper or electronic
form
Employers and health plans that willfully fail to
provide the information required can be fined up to
$1,000 for each such failure
Each failure to provide information to an enrollee
constitutes a separate offense
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Material Modification of Plan
Provision


If a group health plan or health insurance issuer
makes any material modification in any of the terms
of the plan or coverage involved that is not reflected
in the most recently provided summary of benefits
and coverage, the plan or issuer shall provide notice
of such modification to enrollees not later than 60
days prior to the date on which such modification will
become effective on or before March 23, 2012
Employers and health plans that willfully fail to
provide required information can be fined up to
$1,000 for each such failure, and each failure to
provide information to an enrollee constitutes a
separate offense
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Quality Information Reporting

No later than 2012, guidelines must be developed for
group health plan or insurer offering group or individual
health insurance coverage to ensure structures that
•
•


Improve health outcomes
Include information regarding wellness programs and may
include information on smoking cessation, weight
management, stress management, physical fitness, nutrition,
heart disease prevention, healthy lifestyle support, diabetes
prevention.
Requirements are yet to be fully developed and
communicated
Reporting takes effect in 2014
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1099 Information


All Persons engaged in trade of business and making
payment of $600 or more to another person of rent,
salaries, wages, premiums, annuities or compensations
Must furnish name and address of recipient of income
with statements to be furnished to persons with respect to
whom information is required
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Health Reform
2013
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Summary


FSA Limits
Increased Medicare Health Insurance
Tax
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FSA Limits

Limiting Health Flexible Spending Arrangement
Contributions
•

Limits the amount of contributions to health FSAs to
$2,500 per year, indexed by CPI for subsequent years.
The Limit apply only to health FSAs; they do not
apply to dependent care FSAs, health
reimbursement arrangements (HRAs), or HSAs.
(Current law continues to limit contributions to
dependent care FSAs and to HSAs.)
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Increased Medicare Health
Insurance Tax

An additional 0.9% Medicare Hospital Insurance (HI) tax is
imposed on every taxpayer (other than a corporation, estate, or
trust) with respect to earnings and wages received during the
year:
Above $200,000 for individuals
Above $250,000 for joint filers
Above $125,000 for married taxpayers filing
separately

If the employer does not withhold the tax, the employee must
pay the tax, but an employer is not relieved of penalties or
additions to tax applicable to its failure to deduct and withhold
any amount subject to employer withholding.
(see handout for additional revenue provisions)
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Health Reform
2014
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Summary




Pre-existing Condition Exclusion
Employer Waiting Period for Coverage
Penalties for Non-Compliance
Employer Wellness Plans
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Pre-existing Condition

Elimination of all Pre-existing Condition Exclusion
•
Implements strong health insurance reforms that prohibit
insurance companies from engaging in discriminatory
practices that enable them to refuse to sell or renew policies
due to an individual’s health status. Insurers can no longer
exclude coverage for treatment based on pre-existing health
conditions. It also limits the ability of insurance companies
to charge higher rates due to health status, gender, or other
factors. Premiums can vary only on age (no more than 3:1),
geography, family size, and tobacco use.
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Employer Waiting Period for
Coverage
• Precludes waiting periods over 90 days
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Penalties for Non Compliance
with Benefit Mandates

Employer Mandate
•
•
Requires employers with 50 or more employees who
do not offer coverage to their employees to pay
$2,000 annual for each full-time employee over the
first 30 as long as one of their employees receives a
tax credit.
Requires employers who offer coverage but whose
employees receive tax credits to pay $3,000 for each
worker receiving a tax credit up to an aggregate cap of
$2,000 per full-time employee.
(see chart)
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Penalties for Non-Compliance

Penalties will be assessed due to
• Improper disclosure of information (PP 113)
• False information imposed on an individual
•
•
•
(PP 112)
Certification and compliance failures from carriers
(PP 32-33)
Individual penalties for not having minimum
coverage (PP 131-133)
Large group penalties for not reporting employee
health information (PP 137-1390)
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Employer Wellness Plans


Increases the reward possible for these programs from
20% to 30% with a possible increase in up to 50% of the
cost for employee coverage or the cost of family
coverage
In addition, the Secretary shall evaluate community
prevention and wellness programs to be sure they are
evidence-based, and have demonstrated potential to
help beneficiaries (particularly beneficiaries that have
attained 65 years of age) reduce their risk of disease,
disability, and injury by making healthy lifestyle choices,
including exercise, diet, and self-management of chronic
disease.
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Questions?
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Thank You!
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