On-Site Medical Clinics After Health Care Reform

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1 On-Site Medical Clinics After Health Care Reform Presented to MBGH October 21, 2010 Sarah Bassler Millar Drinker Biddle & Reath 191 N. Wacker Drive Chicago, IL (312)

2 Today s Agenda > Legal Issues Prior to Health Care Reform > W-2 Reporting > Excise Tax on Cadillac Plans > New Health Care Reform Mandates

3 Legal Issues Prior to Health Care Reform Is the on-site medical clinic a plan? > ERISA Clinic exempt if facility limited to treatment of minor injuries/illnesses or rendering first aid in the case of work accidents > COBRA Health clinics generally are group health plans subject to COBRA But, clinic is not a group health plan subject to COBRA if it is an on-site first aid facility

4 Legal Issues Prior to Health Care Reform Is the on-site medical clinic a plan? (continued) > HIPAA & Related Laws Exempt from (not a plan under): HIPAA portability requirements Mental Health Parity Act Women s Health & Cancer Rights Act Newborns & Mothers Health Protection Act But still subject to HIPAA privacy/security

5 Legal Issues Prior to Health Care Reform > Tax Treatment of On-Site Medical Clinics Employer-provided coverage under an accident or health plan is excluded from employees income (Code Section 106)

6 Legal Issues Prior to Health Care Reform > Interaction with health savings accounts If clinic provides free or reduced cost significant medical benefits, clinic is considered other coverage preventing HSA eligibility

7 W-2 Reporting > Must report the aggregate cost (determined under rules similar to the [COBRA] rules ) of applicable employersponsored coverage) (Code Section 6051(a)) > Reporting obligation only amount reported is not included in the employee s taxable income > Suspended for 2011 guidance needed

8 W-2 Reporting > Applicable employer-sponsored coverage means: coverage under any group health plan made available to the employee by an employer which is excludable from the employee s gross income or would be so excludable if it were employer-provided coverage (Code Section 4980I) > Generally includes on-site medical clinics Most HIPAA excepted benefits not included but on-site medical clinics specifically carved out of this exception

9 Excise Tax on Cadillac Plans > In 2018: 40% tax on benefit values in excess of $10,200 for individuals ($27,500 families) Indexed at CPI-U+1% for 2019 and CPI-U for 2020 and later Thresholds increased for special groups > Tax is imposed on the Coverage Provider (generally the issuer of insurance or plan administrator)

10 Excise Tax on Cadillac Plans > Uses same term as W-2 reporting: applicable employer-sponsored coverage on-site medical clinics are subject to this tax > Guidance is needed How to value Confirmation of the Coverage Provider

11 New Health Care Reform Mandates > Preventive Care Non-grandfathered plans must provide preventive care with zero cost-sharing innetwork Clarification needed of application to 2-tier and 3-tier systems > Adult Dependent (age 26) Is there a separate plan? Are children eligible for the clinic portion of the plan? Clarification needed

12 For further information on worksite health facilities contact: Larry Boress Executive Director National Association of Worksite Health Centers #