White House proposes new employer mandate rules
Originally posted September 6, 2013 by Ricardo Alonso-Zaldivar on https://www.benefitspro.com
WASHINGTON (AP) — The Obama administration on Thursday released new proposals for carrying out a major requirement of the federal health care law that was postponed earlier this summer.
At issue is how to gather information that would allow the government to enforce a requirement that companies with 50 or more workers provide affordable health insurance to their full-time employees. Companies that don't comply would risk fines.
The mandate was supposed to take effect Jan. 1, but in July the White House unexpectedly announced a one-year delay until 2015. Officials said more time was needed to work out information reporting requirements so they would not be too burdensome for businesses. Delaying the mandate also defused a potential political problem for Democrats in next year's congressional elections.
The new proposal from the Treasury Department seeks comment on options to reduce or streamline reporting by employers, insurers and health plan administrators. In some instances, the administration is proposing to eliminate duplicative reports and in other cases, it's asking for less detail.
Business groups said it will take time to sort through the technicalities but praised the administration's effort to find common ground.
"Retailers are not interested in being overly burdened by bureaucratic red tape or time-wasting, duplicative reporting requirements," Neil Trautwein, the top health policy official for the National Retail Federation, said in a statement.
The information reported by employers and insurers is also critical in enforcing the law's central requirement that virtually all Americans carry health insurance starting Jan. 1. That so-called individual mandate has not been delayed and remains in full force.
The Treasury Department said it will be soliciting feedback on its proposals through early November, and will use the comments to develop final rules.
Although the one-year delay of the employer coverage requirement remains in effect, the administration says it hopes employers will voluntarily begin reporting information next year to smooth the transition in 2015.
IRS Issues Proposed PPACA Rules on Employer-Information Reporting
Originally posted September 6, 2013 by Stephen Miller on https://www.shrm.org
On Sept. 5, 2013, the U.S. Department of the Treasury and the Internal Revenue Service issued two proposed rules intended to streamline the information-reporting requirements for certain employers and insurers under the Patient Protection and Affordable Care Act (PPACA or ACA).
The PPACA requires information reporting under Internal Revenue Code (IRC) Section 6055 by self-insuring employers and other health coverage providers. And under IRC Section 6056, information reporting is required of employers subject to the employer "shared responsibility" provisions, also known as the employer mandate—meaning those with 50 or more full-time equivalent workers, who must provide coverage for employees working an average of at least 130 hours per month (or 30 or more hours per week) looking back at a standard measurement period of not less than three but not more than 12 consecutive months—or pay a $2,000 penalty for each full-time worker above a 30-employee threshold. The shared-responsibility mandate, which was set to take effect in January 2014, has been delayed until January 2015.
One proposed rule, “Information Reporting of Minimum Essential Coverage,” pertains to IRC Section 6055, while the other proposed rule, “Information Reporting by Applicable Large Employers on Health Insurance Coverage Offered Under Employer-Sponsored Plans,” pertains to IRC Section 6056.
“These reporting requirements serve distinct purposes under the ACA,” Timothy Jost, a professor at the Washington and Lee University School of Law in Virginia, explained in a commentary about the proposed rules posted on the journal Health Affairs’ blog. “The large-employer reporting requirement is necessary to determine whether large employers are complying with the employer-responsibility provisions of the ACA and will also help identify individuals who are ineligible for premium tax credits because they have been offered coverage by their employer. The minimum-essential-coverage reporting requirement will assist the IRS in determining whether individuals are complying with the ACA’s individual-responsibility requirement and also whether they are eligible for premium tax credits because they lack minimum essential coverage.”
Once the final rules have been published, employers and insurers will be encouraged to report the specified information in 2014 (when reporting will be optional), in preparation for the full application of the reporting provisions in 2015.
“The absence of these rules was the reason given by the IRS for delaying the employer mandate until 2015,” Jost noted. “The IRS is encouraging voluntary reporting by employers and insurers, subject to the requirements for 2014, and should have no trouble getting the final rules in place for mandatory reporting in 2015.”
Statutory Requirements
Specifically, the PPACA calls for employers, insurers and other reporting entities to report under IRC Section 6055:
- Information about the entity providing coverage, including contact information.
- A list of individuals with identifying information and the months they were covered.
And under IRC Section 6056:
- Information about the applicable large employer offering coverage (including contact information for the company and the number of full-time employees).
- A list of full-time employees and information about the coverage offered to each, by month, including the cost of self-only coverage.
Proposed Reporting Options
The proposed rules describe a variety of options to potentially reduce or streamline information reporting, such as:
- Replacing Section 6056 employee statements with Form W-2 reporting on offers of employer-sponsored coverage to employees, spouses and dependents.
- Eliminating the need to determine whether particular employees are full time if adequate coverage is offered to all potentially full-time workers.
- Allowing organizations to report the specific cost to an employee of purchasing employer-sponsored coverage only if the cost is above a specified dollar amount.
- Allowing self-insured group health plans to avoid providing employee statements under Sections 6055 and 6056 by furnishing a single substitute statement.
- Allowing limited reporting by certain self-insured employers that offer no-cost coverage to employees and their families.
- Permitting health insurance issuers to forgo reporting, under Section 6055, on individual coverage offered through a government-run health care exchange, or marketplace (set to launch in October 2013), because that information will be provided by the marketplace.
- Permitting health insurance issuers, employers and other reporting entities, under Section 6055, to forgo reporting the specific dates of coverage (instead reporting only the months of coverage), the amount of any cost-sharing reductions, or the portion of the premium paid by an employer.
According to Jost, the IRS is attempting to avoid duplication and collecting unnecessary information. “Large employers need only report the employee’s share of the lowest-cost monthly premium for self-only coverage, since a determination as to whether employer coverage is affordable for adjudicating eligibility for premium tax credits is based on the cost of self-only, rather than family, coverage,” he wrote. “Entities that must report minimum essential coverage can report birthdates, rather than Social Security numbers, for dependents if they are unable to secure the Social Security numbers after reasonable efforts.”
The IRS is soliciting comments on the Section 6055 and 6056 proposed rules through Nov. 8, 2013. The agency will take the public comments into account when developing final reporting rules on further simplifications.
Separately, the process to challenge an insurance exchange's finding that an employer's plans are unaffordable or fail to provide minimum essential coverage (thereby triggering penalties against the employer) is presented in a final rule published in the Federal Register on Aug. 30, 2013, by the U.S. Department of Health and Human Services.
Does out-of-pocket delay actually apply to you?
Originally posted September 3, 2013 by Tristan Lejeune on https://ebn.benefitnews.com
Yet another Affordable Care Act delay is in the spotlight: limits on out-of-pocket spending.
According to the law, starting in 2014, health plan participants will be spending no more than $6,350 in total out-of-pocket costs for individuals and $12,700 for family plans. That cap on out-of-pocket spending has been delayed until 2015, however, if an employer is using two separate vendors for its medical and pharmacy benefits. Sandy Ageloff, southwest health & group benefits leader for Towers Watson, says the rule only applies “to nongrandfathered plans” and emphasizes that the delay only applies to those who split their services.
“So the biggest piece of the legislation,” Ageloff says, “is that compliance is still required for Jan. 1, 2014 if the benefit plan – whether it’s a self-funded employer plan or a fully insured carrier program – is using a single vendor for the administration of both medical and pharmacy. The nuance comes in when you have multiple vendors, you get a one-year deferral in total compliance. You still have to comply in pieces, but you don’t have to comply in total.”
The number of plans that maintain their grandfathered status in the face of ACA continues to shrink, but Ageloff estimates that 35% or 40% of large employers use different vendors and thus have the extra year. Complicating things, she says, is that “a number of carriers actually have, behind the scenes, carved out that relationship with a pharmacy vendor,” so two can masquerade as one. Figuring out compliance may require more than just a phone call to your provider.
“For example, if you look at Anthem Blue Cross Blue Shield, they have a subcontracted relationship with ESI to manage their pharmacy benefits,” Ageloff says. “Same is true of a lot of other broad-based medical insurance carriers. So the health plans themselves are taking different interpretations on whether the full mandate for 2014 applies to them, or if they get the deferral. So that’s complicating this. As an employer, if I say, I use Anthem BCBS as either my [third-party administrator] or I’m buying an insured product from them, I’m relying on them to tell me how they interpret their own program. So that’s creating some challenges, particularly for self-funded employers who control their own plan design.”
The National Business Group on Health Vice President of Public Policy Steve Wojcik says, like the employer mandate delay, the out-of-pocket postponement was done to allow systems to catch up to what is required of them in terms of processing and accounting. And, like the employer mandate delay, he says it’s good news.
“It means that employers and their plans have another year to consolidate and coordinate,” Wojcik says. “In many cases the issue is that the PBM handles the pharmacy benefit separately and the medical expenses are handled through the health plan, so a lot of times their systems don’t talk with one another, and then the patient or plan member doesn’t have up-to-the-minute information on where they stand toward their out-of-pocket limit.”
Wojcik says “by and large, most people don’t approach their out-of-pocket limits in a year, so for most people, it’s not going to affect them.” For those who do – usually those with chronic conditions or highly expensive pharmacy needs or both – “it will just be another year before they get relief.”
Don't forget about employee ACA communication due Oct. 1
Originally posted by Keith R. McMurdy August 16, 2013 on https://eba.benefitnews.com
With the recent employer mandate delay, some businesses might be overlooking the requirement to provide a notice to employees about health insurance coverage that may be available through a public exchange.
Employers must provide a notice to each employee, regardless of plan enrollment status or part-time or full-time status, by Oct. 1. The notice must be provided automatically, free of charge, and written in language that the average employee can understand. It may be provided by first class mail or electronically, if the requirements of the U.S. Department of Labor’s electronic disclosures safe harbor are met. It must also be provided to new hires — for 2014, the DOL will consider a notice delivered timely to a new employee if it’s provided within 14 days of the start date.
The notice must inform each employee of three things:
- The existence of state or federal health insurance exchanges.
- If the employer plan’s share of the total allowed costs of benefits provided under the plan is less than 60%, then the employee may be eligible for a federal premium tax credit if the employee purchases a qualified health plan through an exchange.
- If the employee purchases a qualified health plan through an exchange, then the employee may lose the employer contribution to any health benefits plan offered by the employer; also, all or a portion of such contribution may be excludable from income for federal income tax purposes.
The good news is that employers don’t have to create the notices from scratch. The DOL published model notices, one for Employers Who Offer Health Plans, and one for Employers that Do Not Offer Health Plans. If employers have questions about how to complete the forms, this is an opportunity for an employee benefit adviser to step in and provide guidance. Above all, advisers should remind employers that they need to issue them. Just because employers have a year to wait on the coverage mandate does not mean they can ignore other compliance rules like this one.
Delay of health reform mandate has employers making hard benefit choices
Originally posted July 14, 2013 by Jerry Geisel on https://www.businessinsurance.com
Some employers may offer health insurance despite mandate delay.
Affected employers face some tough decisions on what approach they will take in the wake of the Obama administration's unexpected decision to delay a key health care reform law provision.
Administration officials this month delayed by one year to 2015 the Patient Protection and Affordable Care Act requirement that employers with 50 or more employees offer qualified coverage to at least 95% of their full-time employees or pay a $2,000 penalty for each full-time employee.
U.S. Treasury Department officials said the delay was necessary to give the agency more time to simplify how employers are to file health care plan enrollment information with the government.
That delay is being welcomed by employers, especially those who have not decided whether they will offer coverage to those not currently eligible; or, if they have decided, the generosity of the coverage they will provide.
“This is a rare opportunity where an employer can make a smart and thoughtful decision,” said John McGowan, a partner with the law firm Baker & Hostetler L.L.P. in Cleveland.
Some employers, especially those that already have told affected employees that they will expand coverage, are less likely to reverse course and hold off that expansion for another year.
“If you already have figured out your strategy, you probably will implement it,” said J.D. Piro, a senior vice president with Aon Hewitt in Norwalk, Conn.
For example, Cumberland Gulf Group in June announced that, effective Oct. 1, employees working as few as 32 hours a week will be eligible for group coverage, down from the current 40-hour-a-week requirement.
Employees working 30 or 31 hours a week will be given the option of working 32 hours to become eligible for coverage in the company's self-insured plans. For employees who work less than 30 hours, the company will assist them in finding coverage through public insurance ex-changes.
Through that expansion of coverage, which will affect about 1,500 employees, Cumberland Gulf, a $15 billion Framingham, Mass.-based company that owns convenience stores and the Gulf Oil brand, will be shielded from the health care reform law's $2,000 per-employee penalty, which is triggered when coverage is not offered to full-time employees — those working at least 30 hours per week.
That expansion of coverage will remain on track, said John McMahon, Cumberland Gulf's senior vice president and chief of human resources.
“We are going to continue on the path we have laid out. Our strategy is to create a great place to work and to be an employer of choice,” Mr. McMahon said, adding that the company is getting very positive feedback from current and prospective employees.
Other employers who also have announced plans to expand coverage eligibility, though, may find themselves between a “rock and a hard place,” said Ed Fensholt, senior vice president and director of compliance services for Lockton Benefit Group in Kansas City, Mo.
Those employers “will have to weigh the cost savings by pulling the plug for a year with the confusion and damage to employee relations that would occur,” Mr. Fensholt said.
Employers that do not offer coverage to all eligible employees and have not made final decisions on whether they will expand coverage also face issues.
For example, if they wait until 2015 to offer coverage, they could be at a disadvantage if their competitors decide to extend coverage next year, said Steve Wojcik, vice president of public policy at the National Business Group on Health in Washington.
There are other issues for employers not currently offering coverage to consider. By not offering coverage, their lower- and middle-income employees will be eligible for premium subsidies to purchase policies from insurers offering coverage in public insurance exchanges.
Then, in 2015, when the coverage mandate kicks in, the employer could offer a plan that is just rich enough to pass the law's minimum value test, denying employees the government subsidies for exchange coverage they received in 2014.
“Then, you have an employee relations issue,” Mr. Fensholt said.
That issue will be less likely to develop, experts say, if the employees received employer coverage beginning in 2014 and never enrolled in exchanges.
“Some employees will be disappointed. It could be an awkward situation,” said Frank McArdle, an independent benefits consultant in Bethesda, Md.
Still, there are plenty of employers not providing coverage who will decide against offering coverage in 2014.
Employers “may not want to move forward until the dust settles. Some are wondering if the regulations and requirements will actually change during this interim period,” said Michael Thompson, a principal with PricewaterhouseCoopers L.L.P. in New York.
In addition, by waiting, employers will have a better sense of whether Congress will act in the coming months to change the employer mandate, experts say.
For example, prior to the Treasury Department delay, bills were introduced that would change the definition of a full-time employee to those working 40 hours a week — compared with the law's 30-hour threshold — while other measures would exempt more small employers from the requirement to either offer coverage or pay the $2,000 per-employee fine.
While it is difficult to imagine Congress reaching a bipartisan consensus, “anything is possible,” said Rich Stover, a principal with Buck Consultants L.L.C. in Secaucus, N.J.
What hasn't changed for employers in 2014?
Originally posted by Keith R. McMurdy on https://ebn.benefitnews.com
In a move that was generally applauded by employers, the Obama administration announced last week that it would delay implementation of the employer health coverage mandate under the Affordable Care Act until January 1, 2015. The good news is that this gives employers another year to prepare for the so-called pay-or-play mandate that requires employers with at least 50 full-time-equivalent employees to offer affordable health coverage to those who work at least 30 hours a week. The bad news is that it remains unclear what compliance still means for employers.
While the employer mandate is suspended, a variety of key provisions that go into effect on January 1, 2014 remain in play. Subject to any future adjustments, plans are still obligated to comply with a number of specific changes. These include:
- Waiting periods cannot exceed 90 days
- Caps on annual out-of-pocket maximums and elimination of lifetime and annual limits
- Revised Summary of Benefits and Coverage notices and a required notice of availability of exchanges
- Excise taxes and fees, such as the PCORI fee and the reinsurance program fee
While we are awaiting further guidance, and any additional changes, plan sponsors should continue to take the necessary steps to make sure their plans are in compliance. Even though the pay-or-play mandate is suspended, plan sponsors could still be found to have non-compliant plans and face penalties around the ACA. So while you might be able to postpone changes relating to eligibility and affordability, you still have to revise your plan to make sure it complies. This delay only effects who you might have to offer coverage to, not the nature of the coverage that will ultimately be offered.
So employers as plan sponsors should take this delay as an opportunity to focus on making their plans 100% compliant. Consider 2014 a “measurement” year where you can implement those employment structures you might have already discussed to make sure your part-time and full-time employees are clearly defined. Consider this a brief reprieve and not an excuse to ignore ACA completely. Employers might have been given some breathing room on the final due date, but the project still has to be completed.
Used with permission from Fox Rothschild LLP. Keith R. McMurdy is an employee benefits attorney at the firm’s New York City office. To contact the author: kmcmurdy@foxrothschild.com. This Legal Alert is not intended to be, and should not be construed as, legal advice for any particular fact situation.
Majority of employers already PPACA-compliant
Originally posted by Dan Cook on https://www.benefitspro.com
More than half of private companies surveyed about their readiness for the Patient Protection and Affordable Care Act said they were already in compliance with the law.
Moreover, three-quarters of them considered themselves prepared to meet the law’s requirements when they become the law of the land.
That’s the conclusion from a PwC (aka PriceWaterhouseCoopers) survey of 210 large private employers, nearly all of which offer their employees health coverage.
While the survey revealed a modest level of uncertainty among companies about just how they will comply, overall, private employers expressed confidence in their ability to offer employees a health plan that meets the letter of the law.
The PwC survey was conducted prior to the administration’s announcement that it would postpone for a year the penalty portions of the PPACA that apply to large employers.
Highlights from the survey include:
- 56 percent of companies already comply with the PPACA.
- 72 percent say they are prepared to comply.
- 35 percent believe they are well prepared.
- 74 percent say the cost of coverage to employees already meets the 9.5 percent-or-less of household income standard the law will require.
- 70 percent don’t think the act will help them reduce the cost of coverage.
- 58 percent say paying for employee health coverage hasn’t slowed their growth.
The survey revealed that many companies (70 percent) plan to take their own measures to try to control health care coverage costs, including shifting more of the cost to employees. That could lead them to run afoul of the 9.5-percent standard, warned PwC’s Ken Esch, a partner with PwC’s Private Company Services practice.
“Companies that plan to shift more healthcare costs to employees should be careful to calculate whether such cost-shifting could cause the company to fail the PPACA’s affordability test,” cautions Esch. “Companies that offer wellness incentives also should remember to take those incentives into account when calculating the minimum value of their healthcare coverage plans.”
6 key compliance deadlines for 2013 and beyond
As PPACA moves forward, employers must keep track of 6 key compliance deadlines for 2013 and beyond
Original article https://ebn.benefitnews.com
By Kathleen Koster
For plan sponsors, 2013 is a year of crossing Ts and dotting Is on PPACA compliance for their health care plans and strategizing for next year, when the employer mandate and public exchanges go into effect. The health care reform law has many moving parts and a great deal of regulations yet to come, which will keep benefits professionals on their toes all year.
"Employers have never experienced this complexity and oversight in compliance for their health plans. Employers are used to a compliance-rich environment around their retirement plans, but they need an equally robust and hands-on approach to managing the compliance of their health plans," says Mike Thompson, a principal in the human resources services practice of PricewaterhouseCoopers. He adds that "the rules, regulations and level of enforcement have never been greater."
Thompson believes "2013 is a period of strategic re-evaluation of whom the employer will provide benefits to in light of the changes in the individual market allowing guaranteed issue and subsidies for lower- and middle-income Americans."
He believes that employers will also transition around financing as "more employers look at community-type programs with the interest of moving away from their own programs and potentially contributing towards a private exchange or facilitating access to coverage in the open market."
To help employers keep all their compliance ducks in a row while managing and determining long-term strategies for their plans, EBN asked legal and health care experts for top issues to keep in mind for 2013 and beyond.
1. Preparing for the 2014 employer mandate
"At the top of the list is the interpretation of employer responsibility provisions that includes what constitutes minimum essential coverage that employers have to provide or be subject to penalties. Along with that, there are very important issues around the minimum value of the coverage they provide as well as who they have to provide it to," says Paul Dennett, senior vice president of health care reform at the American Benefits Council.
The employer mandate applies only to large employers. Whether an employer is defined as large under PPACA (generally companies with 50 or more employees) depends on the number of its full-time equivalent employees. Companies with 50 or more full-time workers (averaging at least 30 hours per week) must offer minimum health care coverage that is affordable.
In 2013, an employer ought to be determining whether it is a large employer and, therefore, subject to the mandate. "If they offer coverage in 2014, the coverage must meet the minimum value standards and the contributions the employer requires of employees cannot be so high the coverage is unaffordable relative to the employee's household income," says Jean C. Hemphill, practice leader of Ballard Spahr's health care group.
To determine the minimum value, fully insured plans will rely on their insurance carrier for information on whether they meet the minimum value of 60% for their plan. Self-insured plans can turn to an actuary or determine their value with the aid of a government-provided calculator or government-provided checklists.
When it comes to determining the affordability of the plan, an employer cost-sharing arrangement must be affordable relative to the employees' household income, as stated under PPACA. So, "the employee's contribution and cost-sharing obligations can't exceed 9.5% of their household income," says Hemphill.
However, the IRS acknowledges that employers don't know workers' household income, and suggests employers use W-2 wage information instead to determine their plan's affordability.
Hemphill expects more guidance on this issue since employees' contributions are typically much greater for dependents coverage than their own. An employee offered otherwise qualifying coverage by their employer can't use the public exchange unless they prove their employer-sponsored coverage is unaffordable.
The affordability issue may be of greater concern to employers with fairly low-income workforces or for employers not offering comprehensive plans to employees or all employees, such as the mini-medical plans sometimes offered in the retail industry. Employers only need to offer one affordable plan with minimum value to satisfy the rules, however mini-medical plans will be illegal after 2014.
Actuarial experts predict that most high-deductible health plans with deductibles in the $2,000-$3,000 range will most likely qualify, however those with much higher cost-sharing may not meet the minimum value.
While sponsors can vary the deductible and coinsurance amount of HDHPs, they should remember that the higher the deductible, the lower actuarial value of the plan.
"There are variables that can be adjusted in the plan design, but the most important one is where to set the amount of the deductible," says Dennett. He adds that guidance so far has indicated employer contributions toward HSAs or credits toward HRAs will count toward the minimum value. The question is whether the amount contributed is counted 100% to the plan or if it is discounted in the actuarial value formula that HHS would use in the calculation of actuarial value coverage.
Overall, "the Affordable Care Act was designed so employers don't need to make too many plan design changes to their plan," says J.D. Piro, national practice leader for Aon Hewitt's health and benefits legal department. "They may need to open it up to more employees but, generally speaking, they should be able to meet the affordability and minimum value requirements."
2. Public exchanges
Employers are required to provide employees with notice alerting them of the existence of public insurance exchanges. It is thought that the government will issue a model notice for this purpose. At press time, the government had yet to produce this model notice or other guidance about the notice requirement. The March 1 notification deadline has been extended until "late summer or fall," according to a recent FAQ announcement from the Centers for Medicare and Medicaid Services.
"There may still be unanswered questions about whether the state exchanges, partnership exchanges or the federal exchanges are really at an operational readiness stage to be able to go live as of October 2013," says Dennett.
Assuming the exchanges are on track and sponsors receive the guidance they need, they should expect many questions from workers about how the process affects them.
"While most major employers will continue to offer coverage to employees, there will be some confusion around the availability of coverage in the public exchanges and what the implications are [for employees] getting coverage from their employer, says Thompson.
He suggests employees will primarily want to know:
* Do I still have coverage through my employer?
* Am I eligible to get coverage through the exchange?
* Can I potentially get subsidies through the exchange?
* Is it in my best interest to go through the exchange?
3. Waiting periods
Another design-related issue employers must factor into their plans is that under PPACA, waiting periods for health care coverage cannot exceed 90 days. The 90-day period begins when the employee is otherwise eligible for coverage. Employers with a high-turnover workforce that currently have long waiting periods will have to shorten them.
If an employer requires employees to work a minimum number of hours to qualify for coverage, it may need to monitor workers' timesheets in 2013 to determine if and when coverage needs to be offered in 2014; this may be complicated for seasonal employees and other employees with variable hours.
Thompson believes this is part of a larger question of meeting qualifications for providing coverage.
"It's part of a package in my mind," he says. "Employers must evaluate employee classes when looking at whether they meet the minimum threshold of providing coverage to full-time employees. Seasonal, temporary, or contract workers are classes that need to be evaluated in order to avoid or at least understand what the penalties might be."
4. Pre-existing and non-discrimination prohibitions
"The non-discrimination rules are new for insured plans in 2014," says Hemphill. Even though these prohibitions should already be in effect, government agencies have delayed enforcement until they release regulations.
"It will be an important issue because right now there is no requirement to offer coverage to part-time employees, but with the definition of full-time employees as an average of 30 hours per week and new non-discrimination testing rules, the employer obligation may be different," she says.
Either way, employers can expect notice and guidance well before implementation because, "it is a big plan design issue," says Edward I. Leeds, counsel in the employee benefits and executive compensation group at Ballard Spahr.
5. Wellness programs
PPACA includes rules that prohibit plans from discriminating against individuals based on a range of health-related factors. Plans cannot impose restrictions on eligibility or increase employee costs for coverage based on these factors.
"When the government issued guidance under ACA, they actually revised the HIPAA regulations. So now the ACA and HIPAA rules ... will be the same," says Leeds. "By and large the rules follow HIPAA with some changes, the most significant of which is that the potential reward for meeting requirements under the wellness programs will increase as of January 1, 2014."
The potential reward for meeting a wellness requirement will increase from 20% of cost of coverage to 30% of cost of coverage. Incentives related to tobacco cessation will increase up to 50%. (For more details, read "Regs increase wellness rewards," page 28.)
6. Upcoming fees and taxes
Patient-Centered Outcomes Research Institute, established by PPACA, will collect and publish information about clinical effectiveness of treatments for patients. It will be paid for through fees assessed against insurers and self-funded plans equal to $2 ($1 in the first year) per covered life. The assessment will last seven years and eventually be adjusted for inflation. Employers with self-funded plans will need to report and pay these fees starting in July 2013.
The Transitional Reinsurance Program aims to stabilize the individual health insurance market as insurers provide coverage, starting in 2014, to large numbers of individuals who do not currently have coverage and present uncertain risks. The program will provide reinsurance payments to insurers that take on high-risk individuals. The program is funded through a three-year tax (expected to be $63 per covered life in the first year.)
The Additional Medicare Tax, in effect this year, is an additional 0.9% tax applied to high-income individuals. Employers are responsible for withholding the tax from wages or compensation it pays to an employee in excess of $200,000 in a calendar year.