Brught t yu by Hipskind Seyfarth Risk Slutins Health Care Refrm Timeline The health care refrm bill, the Affrdable Care Act (ACA), was signed int law n March 23, 2010. The ACA makes sweeping changes t the U.S. health care system. The ACA s health care refrms, which are fcused n reducing the uninsured ppulatin and decreasing health care csts, are being implemented ver a perid f several years. This Legislative Brief prvides an implementatin timeline f key ACA refrms that affect emplyers and individuals. Please cntact Hipskind Seyfarth Risk Slutins with questins abut hw yu can prepare fr the health care refrm requirements. 2010 EXPANDED INSURANCE COVERAGE Extended Cverage fr Yung Adults. Grup health plans and health insurance issuers ffering grup r individual health insurance cverage that prvide dependent cverage f children must make cverage available fr adult children up t age 26. There is n requirement t cver the child r spuse f a dependent child. This requirement applies t grandfathered and nn-grandfathered plans. Hwever, fr plan years beginning befre Jan. 1, 2014, grandfathered plans need nt cver adult children wh are eligible fr ther emplyer-spnsred cverage, such as cverage thrugh their wn emplyer. The ACA als added a new tax prvisin related t health insurance cverage fr these adult children. As f March 30, 2010, amunts spent n medical care fr an eligible adult child can generally be excluded frm taxable incme. Nte: A grandfathered plan is ne in which an individual was enrlled n March 23, 2010. A plan will retain its grandfathered status even if, after March 23, 2010, cvered individuals renew their cverage, family members are added t cverage r new emplyees (and their families) enrll fr cverage. A health plan will lse its grandfathered status if there are significant cuts t benefits r increases in participants ut-f-pcket spending. Grandfathered status is significant because many ACA refrms d nt apply t grandfathered plans. Access t Insurance fr Uninsured Individuals with Pre-existing Cnditins. The ACA created a temprary high-risk health insurance pl prgram, called the Pre-existing Cnditin Insurance Plan (PCIP), t prvide health cverage t individuals wh have been uninsured fr at least six mnths because f a preexisting cnditin. On Feb. 15, 2013, enrllment in the PCIP prgram was suspended due t limited funding. The enrllment suspensin tk effect immediately in 23 states where the federal gvernment administered the prgram. Hwever, state-based PCIPs culd accept enrllment applicatins thrugh March 2, 2013. The PCIP prgram was scheduled t cntinue until Jan. 1, 2014. Hwever, HHS ffered transitinal cverage fr a limited time perid after Jan. 1, 2014, t PCIP enrllees wh had nt yet secured ther health insurance. This transitinal cverage was intended t allw PCIP enrllees mre time t review Exchange ptins and enrll in a plan befre pen enrllment clsed n March 31, 2014. See www.pcip.gv fr mre infrmatin. In additin, n April 24, 2014, the Centers fr Medicare & Medicaid Services (CMS) issued a bulletin that prvides a special enrllment perid thrugh the Exchange fr individuals wh lse cverage thrugh the 1
PCIP nce the prgram ends. In rder t ensure that eligible individuals wh are lsing cverage thrugh PCIP because the prgram ended can avid a lapse in cverage, CMS is prviding a special enrllment perid fr enrllment in a qualified health plan (QHP) ffered thrugh the FFE in 2014. Accrding t CMS, state-based Exchanges are adpting a similar special enrllment perid. Identifying Affrdable Cverage. HHS established an Internet website www.healthcare.gv thrugh which residents f any state may identify affrdable health insurance cverage ptins in their state. The website als includes infrmatin fr small businesses abut available cverage ptins, reinsurance fr early retirees, small business tax credits and ther infrmatin f interest t small businesses. S-called mini-med r limited-benefit plans were precluded frm listing their plicies n this website. Reinsurance fr Cvering Early Retirees. The ACA established a temprary reinsurance prgram t reimburse participating emplyment-based plans fr a prtin f the cst f prviding health insurance cverage t early retirees and their spuses, surviving spuses and dependents. This prgram was designed t end n Jan. 1, 2014, r earlier, if the $5 billin in funding was exhausted. Due the prgram s ppularity and rapid use f funding, it stpped accepting applicatins as f May 5, 2011 and did nt reimburse claims incurred after Dec. 31, 2011. The deadline fr submitting ERRP reimbursement requests was July 31, 2013. HEALTH INSURANCE REFORM Eliminating Pre-existing Cnditin Exclusins fr Children. Grup health plans and health insurance issuers may nt impse pre-existing cnditin exclusins n cverage fr children under age 19. This prvisin applies t all emplyer plans and nn-grandfathered plans in the individual market. This prvisin als applies t all enrllees effective fr plan years beginning n r after Jan. 1, 2014. Cverage f Preventive Care Services. Grup health plans and health insurance issuers ffering grup r individual health insurance cverage must cver certain preventive care services withut cst-sharing (fr example, deductibles, cpayments r cinsurance). Grandfathered plans are exempt frm this requirement. Prhibiting Rescissins. The ACA prhibits rescissins, r retractive cancellatins, f cverage, except in cases f fraud r intentinal misrepresentatin. Als, plans and issuers must prvide at least 30 days advance ntice t the enrllee befre cverage may be rescinded. This prvisin applies t all grandfathered and nngrandfathered plans. Lifetime and Annual Limits. Grup health plans and health insurance issuers ffering grup r individual health insurance cverage may nt impse lifetime limits r unreasnable annual limits n the dllar value f essential health benefits. This requirement applies t all plans, althugh plans were allwed t request a waiver f the annual limit requirement fr plan years beginning befre Jan. 1, 2014. The annual limit waiver prgram clsed t applicatins n Sept. 22, 2011. All annual dllar limits n essential health benefits are prhibited fr plan years beginning n r after Jan. 1, 2014. HEALTH PLAN ADMINISTRATION Imprved Claims and Appeals Prcess. Grup health plans and health insurance issuers ffering grup r individual health insurance cverage must implement an effective prcess fr benefit claims and appeals f cverage determinatins. A plan s r issuer s internal claims and appeals prcess must cmply with the DOL s 2001 claims prcedure regulatin. In additin, the ACA requires plans and issuers t: Have an internal claims and appeals prcess in effect that prvides claimants with a full and fair review; Prvide infrmatin t claimants in a culturally and linguistically apprpriate manner in sme situatins; Cmply with additinal cntent requirements fr denial ntices; and Cntinue t prvide cverage t a claimant pending the utcme f the appeals prcess. 2
A grace perid fr sme f the ACA s additinal claims and appeals requirements was available until plan years beginning n r after Jan. 1, 2012. Plans and issuers must als implement an external review prcess that meets applicable state r federal requirements. Nndiscriminatin Rules fr Fully Insured Plans. Fully insured grup health plans will have t satisfy nndiscriminatin rules regarding eligibility t participate in the plan and eligibility fr benefits. These rules prhibit discriminatin in favr f highly cmpensated individuals. This refrm, which des nt apply t grandfathered plans, was set t take effect fr plan years beginning n r after Sept. 23, 2010. Hwever, it has been delayed indefinitely pending the issuance f regulatins, which will specify the new effective date. MEDICARE/MEDICAID Rebates fr the Medicare Part D Dnut Hle. Currently, there is a cverage gap, r dnut hle, in mst Medicare Part D plans. Once the plan and participant have paid $2,850 in ttal drug csts ($2,960 fr 2015), the participant is in the cverage gap. The cverage gap ends when the participant has spent $4,550 ($4,700 fr 2015) ut f pcket fr drug csts in a calendar year. In 2010, the ACA prvided a $250 rebate fr all Medicare Part D enrllees wh entered the dnut hle. Starting in 2011, the ACA prvides discunts n brand-name drugs and generic drug cverage in the dnut hle. The dnut hle gap will be filled by 2020. Medicaid Flexibility fr States. Under the ACA, states have the ptin t cver additinal individuals under Medicaid. States will be able t cver parents and childless adults wh have incmes up t 133 percent f the federal pverty level (FPL). FEES AND TAXES Small Business Tax Credit. The first phase f the small business tax credit fr qualified small emplyers began in 2010. Eligible emplyers can receive a credit fr cntributins tward emplyees health insurance. The credit is up t 35 percent f the emplyer s cntributin. There is als up t a 25 percent credit fr small tax-exempt rganizatins. The tax credits increased up t 50 percent f premiums in 2014, when the health insurance Exchanges became peratinal. Hwever, the eligibility rules fr the tax credit als changed in 2014 and require small emplyers t purchase insurance thrugh an Exchange t be eligible fr the credit. Indr Tanning Services Tax. The ACA impsed an additinal 10 percent tax n amunts paid fr indr sun tanning services. 2011 EXPANDED INSURANCE COVERAGE Cmmunity Living Assistance Services and Supprts Prgram (CLASS Act). The ACA created a vluntary, lng-term care insurance prgram fr disabled adults. Althugh the prgram was technically effective Jan. 1, 2011, significant prtins were nt required t be established until 2012. On Oct. 14, 2011, CLASS Act implementatin was suspended due t cncerns abut the prgram s fiscal sustainability and affrdability. On Jan. 2, 2013, the CLASS Act was repealed by legislatin apprved by Cngress and signed by President Obama t avid the fiscal cliff. HEALTH PLAN ADMINISTRATION Imprving Medical Lss Ratis (MLRs). Health insurance issuers ffering grup r individual health insurance cverage (including grandfathered health plans) must annually reprt n the share f premium dllars spent n health care and prvide cnsumer rebates fr excessive MLRs. Standardizing the Definitin f Qualified Medical Expenses. The ACA changed the definitin f qualified medical expenses fr health savings accunts (HSAs), health flexible spending accunts (FSAs) and health reimbursement arrangements (HRAs) t the definitin used fr the itemized tax deductin. This means that 3
expenses fr ver-the-cunter (OTC) medicines and drugs may nt be reimbursed by these plans unless they are accmpanied by a prescriptin. There is an exceptin fr insulin. Als, OTC medical supplies and devices may cntinue t be reimbursed withut a prescriptin. Cafeteria Plan Changes. The ACA created a simple cafeteria plan t prvide a vehicle thrugh which small businesses can prvide tax-free benefits t their emplyees. This plan is designed t ease the small emplyer s administrative burden f spnsring a cafeteria plan. The prvisin als exempts emplyers wh make cntributins fr emplyees under a simple cafeteria plan frm certain nndiscriminatin requirements applicable t highly cmpensated and key emplyees. MEDICARE/MEDICAID Medicare Part D Discunts. T make prescriptin drugs mre affrdable fr Medicare enrllees, the ACA prvided a 50 percent discunt n all brand-name drugs and bilgics in the dnut hle. Additinal discunts n brand-name and generic drugs will als be phased in t cmpletely fill the dnut hle by 2020 fr all Part D enrllees. Additinal Preventive Care Services. The ACA prvided persnalized preventin plan services and a free, annual wellness visit fr Medicare beneficiaries. The ACA als eliminated cst-sharing fr preventive care services beginning in 2011. FEES AND TAXES Increased Tax n Withdrawals frm HSAs and Archer MSAs. The ACA increased the additinal tax n HSA withdrawals prir t age 65 that are nt used fr qualified medical expenses frm 10 t 20 percent. The additinal tax fr Archer MSA withdrawals nt used fr qualified medical expenses als increased frm 15 t 20 percent. 2012 HEALTH INSURANCE REFORM Additinal Preventive Care Services fr Wmen. Beginning in 2010, nn-grandfathered grup health plans and health insurance issuers ffering grup r individual nn-grandfathered health insurance cverage were required t prvide cverage fr preventive care services withut cst-sharing requirements. Effective fr plan years beginning n r after Aug. 1, 2012, the required preventive care services include specific services fr wmen, including cntraceptives and cntraceptive cunseling. Exceptins t the cntraceptive cverage requirement apply t religius emplyers. EXPANDED INSURANCE COVERAGE Cmmunity Living Assistance Services and Supprts Prgram (CLASS Act). As nted abve, the CLASS Act, which wuld have created a vluntary lng-term care insurance prgram fr disabled adults, was technically effective Jan. 1, 2011. Hwever, significant parts f the prgram, such as enrllment and premium payment rules, were t be established in 2012. CLASS Act implementatin was suspended n Oct. 14, 2011, due t cncerns n fiscal sustainability and affrdability. The CLASS Act was repealed n Jan. 2, 2013. HEALTH PLAN ADMINISTRATION Unifrm Summary f Benefits and Cverage. All health plans (grandfathered and nn-grandfathered) must prvide a unifrm summary f the plan s benefits and cverage t participants. The summary must be written in easily understd language. Any material mid-year changes t the infrmatin cntained in the summary must be prvided t participants 60 days in advance. The ACA indicated that plans wuld be required t start prviding the summary by March 23, 2012, but this deadline was pushed back. 4
Plans and issuers were required t start prviding the summary by the fllwing deadlines: Issuers were required t prvide the summary t health plans effective Sept. 23, 2012; Plans and issuers were required t prvide the summary t participants and beneficiaries wh enrll r reenrll during an pen enrllment perid starting with the first day f the first pen enrllment perid that begins n r after Sept. 23, 2012; Plans and issuers must have prvided the SBC t participants wh enrll fr cverage ther than thrugh an pen enrllment perid (fr example, newly eligible individuals and special enrllees) starting with the first day f the first plan year that begins n r after Sept. 23, 2012. Reprting Health Cverage Csts n Frm W-2. Emplyers must disclse the value f the health cverage they prvide t each emplyee n the emplyee s annual Frm W-2. This requirement was effective, but ptinal, fr the 2011 tax year and is mandatry fr later years fr mst emplyers. Frm W-2 reprting is ptinal fr small emplyers (thse filing fewer than 250 Frms W-2) until further guidance is issued. Hwever, emplyers that file at least 250 Frms W-2 must cmply fr 2012 and future years. Medical Lss Rati (MLR) Rebates. Spnsrs f fully-insured plans may qualify fr a rebate frm their health insurance issuers due t the MLR rules. The MLR rules require insurance cmpanies t spend a certain percentage f premium dllars n medical care and health care quality imprvement, rather than administrative csts. Any prtin f a rebate that is a plan asset must be used fr the exclusive benefit f the plan s participants and beneficiaries. This may include, fr example, reducing participants premium payments. FEES AND TAXES Patient-centered Outcmes Research Institute (PCORI) Fees. Effective fr plan years ending n r after Oct. 1, 2012, issuers and spnsrs f self-insured health plans must pay PCORI fees t fund health care research. The PCORI fees d nt apply fr plan years ending n r after Oct. 1, 2019. Thus, fr calendar year plans, the PCORI fees will be effective fr the 2012 thrugh 2018 plan years. Fr plan years ending befre Oct. 1, 2013 (that is, 2012 fr calendar year plans), the fee is $1 multiplied by the average number f lives cvered under the plan. The fee is $2 fr plan years ending n r after Oct. 1, 2013 and befre Oct. 1, 2014. Fr plan years ending n r after Oct. 1, 2014, and befre Oct. 1, 2015, the fee amunt was adjusted t $2.08 (see Ntice 2014-56), and will be indexed fr future years. PCORI fees must be reprted and paid by July 31 f each year. The first due date fr paying PCORI fees was July 31, 2013. 2013 HEALTH PLAN ADMINISTRATION Administrative Simplificatin. In 2013, health plans must adpt and implement unifrm standards and perating rules fr electrnic exchange f health infrmatin t reduce paperwrk and administrative burdens and csts. Fr example, effective Jan. 1, 2013, health plans must cmply with HHS s perating rules fr electrnic health care transactins regarding eligibility fr health plan cverage and health care claim status. Limiting Health FSA Cntributins. Effective fr plan years beginning in 2013, the ACA limits the amunt f salary reductin cntributins t health FSAs t $2,500 per year. On Oct. 31, 2013, the IRS annunced that the health FSA limit will remain at $2,500 fr taxable years beginning in 2014. Hwever, the $2,500 limit ptentially will be indexed fr cst-f-living adjustments fr later years. Nte: On Oct. 30, 2014, the IRS annunced that the health FSA limit will be increased t $2,550, effective fr plan years beginning n r after Jan. 1, 2015. Emplyee Ntice f Exchanges. Emplyers must prvide a ntice t emplyees abut the Exchanges. The riginal deadline, set fr March 1, 2013, was delayed. On May 8, 2013, the DOL annunced a cmpliance 5
deadline f Oct. 1, 2013. The DOL als issued mdel language fr emplyers that d nt ffer a health plan and mdel language fr emplyers wh ffer a health plan t sme r all emplyees. On Sept. 11, 2013, the DOL issued an FAQ annuncing that there are n fines r penalties under the ACA fr failing t prvide the ntice. Thus, emplyers cannt be fined fr failing t ntify emplyees abut the ACA s Exchanges. HIPAA Certificatin. By Dec. 31, 2013, grup health plans must certify that they cmply with certain HIPAA rules n electrnic transactins. On Dec. 31, 2013, HHS issued a prpsed rule that extends the initial certificatin deadline t Dec. 31, 2015. FEES AND TAXES Eliminating Deductin fr Medicare Part D Subsidy. In the past, emplyers that received the Medicare Part D retiree drug subsidy were permitted t take a tax deductin fr their prescriptin drug csts, including csts attributable t the subsidy. The deductin fr the retiree drug subsidy was eliminated in 2013. Increased Threshld fr Medical Expense Deductins. The ACA increases the incme threshld fr claiming the itemized deductin fr medical expenses frm 7.5 percent f incme t 10 percent. Hwever, individuals ver 65 may claim the itemized deductin fr medical expenses at 7.5 percent f adjusted grss incme thrugh 2016. Additinal Medicare Tax fr High Wage Wrkers. The ACA increases the Medicare hspital insurance tax rate by 0.9 percentage pints n wages ver $200,000 fr an individual ($250,000 fr married cuples filing jintly). The tax is als expanded t include a 3.8 percent tax n net investment incme in the case f taxpayers earning ver $200,000 ($250,000 fr jint returns). Medical Device Excise Tax. The ACA established a 2.3 percent excise tax n the first sale fr use f medical devices. Eye glasses, cntact lenses, hearing aids and any device f a type that is generally purchased by the public at retail fr individual use are exempted frm the tax. PCORI Fees. Fr plan years ending n and after Oct. 1, 2012 and befre Oct. 1, 2019, self-insured plans and issuers must pay fees per cvered life. The initial fee is $1 per cvered life, increasing t $2 per cvered life fr plan years ending n r after Oct. 1, 2013, and $2.08 per cvered life fr plan years ending n r after Oct. 1, 2014, but befre Oct. 1, 2015 (and adjusted annually fr later plan years). The first pssible payments were due n July 31, 2013. 2014 COVERAGE MANDATES Individual Cverage Mandate. The ACA requires mst individuals t btain acceptable health insurance cverage r pay a penalty, beginning in 2014. The penalty starts at $95 per persn fr 2014. The penalty amunt increases t $325 in 2015 and t $695 (r up t 2.5 percent f incme) in 2016, up t a cap f the natinal average brnze plan premium. After 2016, dllar amunts are indexed. Families pay half the penalty amunt fr children, up t a cap f three times the adult penalty fr that year. Individuals may be eligible fr an exemptin frm the penalty in certain circumstances (fr example, if they cannt affrd cverage). Emplyer Cverage Mandate. See the 2015 sectin belw. The emplyer mandate prvisins were set t take effect n Jan. 1, 2014, but have been delayed fr ne year, until 2015. Emplyers with 50-99 full-time (and full-time equivalent) emplyees may qualify fr an additinal ne-year delay, until 2016. HEALTH INSURANCE EXCHANGES The ACA requires each state t establish a health insurance Exchange (r Marketplace) in 2014. Individuals and small emplyers are eligible t shp fr insurance thrugh the Exchanges. 6
Small Business Health Optins Prgram (SHOP). The Exchange fr small emplyers is called the Small Business Health Optins Prgram (SHOP). Small emplyers are thse with up t 100 emplyees. If a small emplyer later grws abve 100 emplyees, it may still be treated as a small emplyer. Hwever, states may limit emplyers participatin in the Exchanges t businesses with up t 50 emplyees until 2016. States may allw large emplyers with ver 100 emplyees t participate in the Exchanges in 2017. State Optins. States have three main ptins with respect t their Exchange. They can: Establish and run a state-based Exchange; Have HHS establish a federally-facilitated Exchange (FFE) fr their residents; r Partner with HHS s that sme FFE functins can be perfrmed by the state. A state may als elect t partner with HHS s that the state runs the SHOP Exchange and HHS runs the individual market Exchange. SHOP Emplyee Chice Mdel. On June 4, 2013, HHS delayed implementatin f the emplyee chice mdel as a requirement fr all SHOPs fr ne year, until 2015. Fr 2014, the federally-facilitated SHOP (FF- SHOP) will assist emplyers in chsing a single QHP t ffer their emplyees. Hwever, many state-perated SHOPs ffer the emplyee chice mdel in 2014, including Califrnia, New Yrk and Clrad, amng thers. Als, HHS prvided an additinal ne-year transitin plicy fr the emplyee chice mdel fr certain SHOPs. This transitin plicy allws a state s Insurance Cmmissiner t recmmend that emplyee chice nt be implemented in that state in 2015 if the Cmmissiner can adequately explain that this wuld be in the best interest f small emplyers (and their emplyees and dependents), given the likelihd that implementing emplyee chice wuld cause issuers t price their prducts and plans higher in 2015 than they wuld therwise price them, due t the issuers' beliefs abut adverse selectin. In FF-SHOPs, state Insurance Cmmissiners were required t submit this recmmendatin t HHS by June 2, 2014. On June 10, 2014, HHS released a list f FF-SHOP states where the emplyee chice mdel wuld be further delayed. In ttal, HHS apprved the recmmendatins f 18 states with an FF-SHOP t nt implement emplyee chice in 2015, including Alabama, Alaska, Arizna, Delaware, Illinis, Kansas, Luisiana, Maine, Michigan, Mntana, New Hampshire, New Jersey, Nrth Carlina, Oklahma, Pennsylvania, Suth Carlina, Suth Dakta and West Virginia. Emplyers in these states will be able t ffer emplyees a single health plan and a single dental plan thrugh the SHOP Exchange. Unless HHS issues guidance prviding therwise, emplyee chice will be available in all FF-SHOPs in 2016. Free Chice Vucher. The ACA prvided that wrkers wh qualified fr an affrdability exemptin t the individual mandate, but did nt qualify fr tax credits, culd use their emplyer cntributin t enrll in an Exchange plan. This requirement is knwn as the free chice vucher prvisin. The federal apprpriatins bill, enacted n April 15, 2011, eliminated the free chice vucher prvisin. HEALTH INSURANCE REFORM Additinal health insurance refrm measures are effective in 2014. Guaranteed Issue and Renewability. Health insurance issuers ffering health insurance cverage in the individual r grup market must accept every emplyer and individual that applies fr cverage, and must renew r cntinue t enfrce the cverage at the ptin f the plan spnsr r individual. Pre-existing Cnditin Exclusins. Effective fr plan years beginning n r after Jan. 1, 2014, grup health plans and health insurance issuers may nt impse pre-existing cnditin exclusins n any cvered individual, regardless f the individual s age. 7
Insurance Premium Restrictins. Health insurance issuers in the individual and small grup markets may nt charge higher rates due t heath status, gender r ther factrs. Premiums may vary based nly n age (n mre than 3:1), gegraphy, family size and tbacc use. The rating limitatins will nt apply t health insurance issuers in the large grup market unless the state elects t ffer large grup cverage thrugh the state Exchange (beginning n r after 2017). Als, these restrictins d nt apply t grandfathered cverage. Nndiscriminatin Based n Health Status. Grup health plans and health insurance issuers ffering grup r individual health insurance cverage (except grandfathered plans) may nt establish rules fr eligibility r cntinued eligibility based n health status-related factrs. Nndiscriminatin in Health Care. Grup health plans and health insurance issuers ffering grup r individual insurance cverage may nt discriminate against any prvider perating within their scpe f practice. Hwever, this prvisin des nt require a plan t cntract with any willing prvider r prevent tiered netwrks. It als des nt apply t grandfathered plans. Plans and issuers als may nt discriminate against individuals based n whether they receive subsidies r cperate in a Fair Labr Standards Act investigatin. Annual Limits. Restricted annual limits are permitted until 2014. Hwever, fr plan years beginning in 2014, plans and issuers may nt impse annual dllar limits n the cverage f essential health benefits. Excessive Waiting Perids. Grup health plans and health insurance issuers ffering grup r individual health insurance cverage may nt require a waiting perid f mre than 90 days. Cverage fr Clinical Trial Participants. Nn-grandfathered grup health plans and insurance plicies may nt terminate cverage because an individual chses t participate in a clinical trial fr cancer r ther lifethreatening diseases r deny cverage fr rutine care that they wuld therwise prvide just because an individual is enrlled in such a clinical trial. Cmprehensive Benefits Cverage. Health insurance issuers that ffer health insurance cverage in the individual r small grup market must prvide the essential benefits package required f plans sld in the health insurance Exchanges. This requirement des nt apply t grandfathered plans. Limits n Cst-sharing. Nn-grandfathered grup health plans are subject t limits n cst-sharing r utf-pcket csts fr essential health benefits. The cst-sharing limits include bth an verall annual limit (r an ut-f-pcket maximum) and an annual deductible limit. The deductible limit applied nly t nn-grandfathered insured plans in the small grup market. The ut-fpcket limit applies t all nn-grandfathered health plans. The final rule allwed a health plan t exceed the ACA s deductible limit if a plan culd nt reasnably reach the actuarial value f a given level f cverage (that is, a metal tier brnze, silver, gld r platinum) withut exceeding the limit. On April 1, 2014, the Prtecting Access t Medicare Act f 2014 was signed int law, which repealed the ACA s annual deductible limit, effective as f the date that the ACA was enacted (March 23, 2010). Due t the actuarial value exceptin prvided under the final rule, this repeal may nt significantly impact small emplyers. Hwever, it will give small emplyers with insured plans mre flexibility t ffer higher deductible health plans (which typically have lwer premiums). The repeal f the annual deductible limit did nt impact the ut-f-pcket maximum, which remains in effect fr all nn-grandfathered health plans. Fr 2014, the ut-f-pcket maximum limit is $6,350 fr self-nly cverage and $12,700 fr family cverage. The deductible limit was $2,000 fr self-nly cverage and $4,000 fr family cverage. On March 5, 2014, HHS annunced the cst-sharing limits fr 2015 in the 2015 Ntice f Benefit and Payment Parameters Final Rule. The 2015 ut-f-pcket maximum limit is $6,600 fr self-nly cverage and $13,200 fr family cverage. Risk-spreading Mechanisms. The ACA includes refrms related t insurance risk allcatin in 2014, thrugh reinsurance, risk crridrs and risk adjustment. These refrms are intended t prtect against risk selectin 8
and market uncertainty as insurance changes and the Exchanges are implemented. The reinsurance prgram, which perates frm 2014 thrugh 2016, requires health insurance issuers and self-insured plans t make cntributins based n a federal cntributin rate. States may cllect additinal cntributins n tp f the federal cntributin rate. Fr the 2015 and 2016 benefit years, self-insured plans that d nt use a third party administratr fr their cre administrative functins are exempt frm paying reinsurance fees. EMPLOYER WELLNESS PROGRAMS Under the ACA, nndiscriminatin rules fr emplyer wellness prgrams are changed slightly. Existing wellness rules under HIPAA allw wellness incentives f up t 20 percent f the ttal premium, as lng as the prgram meets certain cnditins. In 2014, the ACA increases the ptential incentive t 30 percent f the premium fr emplyee participatin in the prgram r meeting certain health standards. The ACA als increases the maximum reward fr wellness prgrams designed t prevent r reduce tbacc t 50 percent f the cst f health cverage. Emplyers must ffer an alternative standard t emplyees fr whm it is unreasnably difficult r inadvisable t meet the standard. FEES AND TAXES Individual Health Care Subsidies. The ACA makes subsidies available thrugh the Exchanges t ensure that peple can btain affrdable cverage. Subsidies are available fr peple with incmes abve Medicaid eligibility and belw 400 percent f pverty level wh are nt eligible fr r ffered ther acceptable cverage. The subsidies apply t bth premiums and cst-sharing. Small Business Tax Credit. The secnd phase f the small business tax credit fr qualified small emplyers is implemented in 2014. Eligible small emplyers that purchase grup health cverage thrugh an Exchange may receive a tax credit fr health insurance cntributins. In 2014, the maximum credit increases t 50 percent f premiums paid fr taxable small emplyers, and 35 percent f premiums paid fr tax-exempt small emplyers. Beginning in 2014, the credit is nly available t an emplyer fr tw cnsecutive taxable years. Health Insurance Prviders Fee. The ACA impses an annual, nn-deductible fee n the health insurance sectr, allcated acrss the industry accrding t market share. The fee des nt apply t cmpanies whse net premiums written are $25 millin r less. 2015 EMPLOYER COVERAGE MANDATE Applicable large emplyers (ALEs) with 50 r mre full-time emplyees (including full-time equivalents, r FTEs) that d nt ffer health cverage t their full-time emplyees (and dependents) that is affrdable and prvides minimum value will be subject t penalties if any full-time emplyee receives a subsidy fr Exchange cverage. These requirements are knwn as the emplyer shared respnsibility r pay r play rules. On Feb. 12, 2014, the IRS published final rules implementing the emplyer mandate, which include transitin relief t help ALEs cmply with the new requirements. Effective Date Delay. The emplyer mandate was set t take effect n Jan. 1, 2014. Hwever, n July 2, 2013, the Treasury delayed the emplyer mandate penalties and related reprting requirements fr ne year, until 2015. ALEs with 100 r mre full-time emplyees (including FTEs) will be subject t the emplyer mandate starting in 2015. Hwever, the final rules delay implementatin fr eligible medium-sized emplyers fr an additinal year. Under this transitin rule, ALEs with fewer than 100 full-time emplyees (including FTEs) will generally have an additinal year, until 2016, t cmply with the emplyer mandate. Transitin Relief fr Penalties. The final rules als include transitin relief fr determining an emplyer s liability fr a penalty fr 2015. The penalty amunt fr nt ffering health cverage t substantially all full- 9
time emplyees (and dependents) is $2,000 annually fr each full-time emplyee, excluding the first 30 fulltime emplyees. Fr 2015, instead f excluding the first 30 emplyees, an ALE with at least 100 full-time emplyees (including FTEs) may exclude the first 80 full-time emplyees under this calculatin. Als, under the final rules, an ALE will satisfy the requirement t ffer cverage t substantially all f its fulltime emplyees fr 2015 if it ffers cverage t at least 70 percent f its full-time emplyees. In 2016 and beynd, t meet this requirement, an ALE must ffer cverage t all but five percent (r, if greater, five) f its full-time emplyees and dependents. ALEs wh ffer health cverage, but whse emplyees receive subsidies because the cverage is unaffrdable r des nt prvide minimum value, will be subject t a fine f up t $3,000 annually fr each full-time emplyee receiving a subsidy, with a maximum annual fine f $2,000 per full-time emplyee, excluding the first 30 emplyees (80 emplyees fr 2015 fr ALEs with 100 r mre full-time emplyees). EMPLOYER REPORTING REQUIREMENTS The ACA created new reprting requirements under Internal Revenue Cde (Cde) sectins 6055 and 6056. Under these new reprting rules, certain emplyers will be required t prvide infrmatin t the IRS abut the health plan cverage they ffer (r d nt ffer) t their emplyees (such as infrmatin n the design and cst f their plans, as well as emplyees cvered by the plan). These new reprting requirements apply t: Emplyers with self-insured health plans (Cde 6055) Every health insurance issuer, spnsr f a self-insured health plan, gvernment agency that administers gvernment-spnsred health insurance prgrams and any ther entity that prvides minimum essential cverage must file an annual return with the IRS reprting infrmatin fr each individual wh is prvided with this cverage. Related statements must als be prvided t individuals. Applicable large emplyers with at least 50 full-time emplyees, including FTEs (Cde 6056) Applicable large emplyers subject t the ACA s shared respnsibility prvisins must file a return with the IRS that reprts the terms and cnditins f the health care cverage prvided t the emplyer s full-time emplyees fr the calendar year. Related statements must als be prvided t emplyees. The Cde Sectins 6055 and 6056 reprting requirements were set t take effect in 2014. Hwever, n July 2, 2013, the Treasury annunced that emplyers will have an additinal year t cmply with these health plan reprting requirements. Thus, the Cde Sectins 6055 and 6056 reprting requirements will becme effective in 2015. The first returns will be due in 2016 fr cverage prvided in 2015. HEALTH PLAN ADMINISTRATION HIPAA Certificatin. The ACA requires grup health plans t certify that they cmply with certain HIPAA rules n electrnic transactins. The ACA included an initial certificatin deadline f Dec. 31, 2013. Hwever, n Dec. 31, 2013, HHS issued a prpsed rule that extends the initial certificatin deadline t Dec. 31, 2015. Limiting Health FSA Cntributins. On Oct. 30, 2014, the IRS annunced that the health FSA limit will increase t $2,550, effective fr plan years beginning n r after Jan. 1, 2015. The health FSA limit will ptentially be further increased fr cst-f-living adjustments fr later years. An emplyer may impse its wn dllar limit n emplyees salary reductin cntributins t a health FSA, as lng as the emplyer s limit des nt exceed the ACA s maximum limit in effect fr the plan year. 10
2018 TAXES AND FEES High-cst Plan Excise Tax. Beginning in 2018, the ACA impses a 40 percent excise tax n the excess benefit f high cst emplyer-spnsred health insurance. This tax is als knwn as the Cadillac tax. The annual limit fr purpses f calculating the excess benefits is $10,200 fr individuals and $27,500 fr ther than individual cverage. Respnsibility fr the tax is n the cverage prvider which can be the insurer, the emplyer r a third-party administratr. There are a number f exceptins and special rules fr high cverage cst states and different jb classificatins. 11