Employment Industry News

Health Care Reform: What You Need to Know

November 2010

It remains to be seen what the full effects of this year’s Patient Protection And Affordable Care Act (PPACA) — more commonly referred to as “health care reform of 2010” — will be. One thing that is clear, however, says Jonathan Braddock, CEO of ISG Advisors in Madison, WI: Employers are likely to see increasing costs. For instance, “There will no longer be any lifetime limits allowed by insurance companies who have historically had limits of from one to two million, dollars.” All insurance policies renewed after September 23, 2010 will no longer have a cap.

Another change that will affect costs is dependent coverage for adult children up to age 26, whether they’re in school, independent, married or living with their parents. Other changes:

• Insurance companies can no longer exclude those under 19 with pre-existing conditions. (Beginning in 2014, this will extend to all ages.)
  
• Insurance companies can no longer rescind coverage, except for fraud or blatant misrepresentation.
• Preventive services must now be covered with no cost-sharing. So, if a health plan had a co-pay for routine annual exams, it will no longer apply.
• Insurance companies must cover emergency services at in-network costs even if received out of network.

Each of these changes benefit certain segments of the population and can generally be considered “good things.” But, as usual, good things come at a cost.

Other Issues

Coverage requirements. Beginning in 2014, large employers that fail to offer full-time employees the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan, and have at least one full-time employee enrolled in a qualified health plan for which a premium tax credit or cost-sharing reduction is allowed or paid for the employee are subject to an assessable payment.

Small-employer issues. Beginning in 2014, companies with 50 or more employees will face fines of $2,000 – $3,000 per employee if they do not offer them health insurance coverage.

Cadillac plan provisions. These provisions will not take effect until 2018. When they do, they will affect all plans that cost more than $27,500 for families and $10,200 for individuals.

Part-time workers. Under the new shared responsibility requirement, all employees working an average of at least 30 hours per week must be eligible for affordable coverage or the employer may be subject to a penalty.

HSA impacts. For tax years after December 31, 2010, the cost of over-the-counter medicines may not be reimbursed with excludible income, such as HSAs, unless prescribed by a physician.

Lactation breaks. Employers are required to provide a reasonable break for an employee to express milk for one year after a child’s birth.

State exchanges. By January 1, 2014, states must establish American Health Benefit Exchanges and Small Business Health Options Program (SHOP) exchanges administered by a governmental agency or non-profit organization. Under these exchanges, individuals and small businesses with 100 or fewer employees can purchase qualified coverage. Starting in 2017, states may allow businesses with more than 100 employees to purchase coverage in the SHOP Exchange. ▲

For More Information:

• Official US government site provides ongoing news and information about health care reform.
  http://www.healthcare.gov
• Official government site provides information about the President’s Plan, its progress, and guiding principles of health care reform.
  www.whitehouse.gov/issues/health-care

Time Line of Health Care Form Impacts

2010

• Small Business Tax Credit
• Retiree Coverage
• Non-Discrimination
• High Risk Pools
• Lifetime Limits/Annual Limits
• Dependent Coverage
• Pre-existing Conditions
• Ban on Rescission
• Emergency Services
• Primary Care Physician
• Wellness
• Preventive Services
• Nursing Mothers

2011

• Increased Tax on HSAs
• No OTC Reimbursement
• CLASS Act

2012

• New Summary of Benefits

2013

• Increased Tax for High Income Earners
• Itemized Deduction Increase
• FSAs
• Part D Deductibility
• Provide Notice of Exchanges

2014

• Guaranteed Issue
• Pre-existing Conditions
• Full Prohibition on Annual and Lifetime Limits
• Redefines Small Group

2014

• Mandates
  • Insurance Company
  • Employer
  • Individual
  • Non-Compliance Penalties
  • Vouchers
  • Auto Enrollment
  • Wellness

2018

• Cadillac Tax

(Source: Jonathan Braddock, ISG Advisors)

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