The Affordable Care Act (ACA) is in full swing. Hereâ€™s a look at some of the key provisions that may affect employers and insured group health plans.
Note: This summary is for general reference purposes only and is not all-inclusive. The information is subject to change based on new government requirements or amendments to the law. Additionally, your group plan may be exempt from certain requirements. If you have any questions regarding your obligations with respect to Health Care Reform or the ACA, you should consult with a knowledgeable employment law attorney and your carrier.
(Certain requirements under the ACA apply on a plan year basis, meaning that the changes will take effect when a group health plan begins a new plan year. As a result, compliance deadlines may vary.)
In anticipation of open enrollment for exchanges (scheduled to begin on October 1, 2013), employers are required to provide each employee a written notice with information about an exchange, including notice that the employee may be eligible for a premium tax credit (if applicable) and that the employee may lose employer health plan contributions if the employee buys a qualified health plan through the exchange.
Non-grandfathered group health plans are required to cover additional womenâ€™s preventive services such as well-woman visits, breastfeeding support, domestic violence screening, and contraception without charging a co-payment, co-insurance or deductible, starting with plan years beginning on or after August 1, 2012.
Effective for plan years beginning on or after January 1, 2014, the amount of salary reduction contributions to a health flexible spending account (FSA) is limited to $2,550 annually, adjusted for inflation.
The $2,550 limit does not apply to contributions or amounts available for reimbursement under other types of FSAs, health savings accounts (HSAs), or health reimbursement arrangements (HRAs), or to salary reduction contributions to cafeteria plans used to pay an employeeâ€™s share of health coverage premiums
Employers are required to withhold Additional Medicare Tax (at a rate of 0.9%) on wages or compensation paid to an employee in excess of $200,000 in a calendar year, for taxable years beginning after December 31, 2012. There is no â€œemployer matchâ€ for the Additional Medicare Tax and there is no requirement that an employer notify its employees when it begins withholding the Additional Medicare Tax.
Beginning with calendar year 2014 Forms W-2 (required to be furnished to employees in January 2015), employers that provide a group health plan to employees and who have not been granted transitional relief generally must report the cost of the coverage provided to each employee annually. This requirement does not apply to employers that were required to file fewer than 250 Forms W-2 for the preceding calendar year, unless and until the IRS publishes further guidance giving at least 6 monthsâ€™ advance notice.
Effective for plan years and open enrollment periods beginning on or after September 23, 2012, group health plans and health insurance issuers offering group coverage are required to provide participants and beneficiaries with a summary of benefits and coverage (SBC) containing specific information about the plan and coverage, at several points during the enrollment process and upon request.
Additionally, notice of any material change in any of the terms of the plan or coverage that is not reflected in the most recently provided SBC, and that occurs other than in connection with a renewal or reissuance of coverage, generally must be provided to enrollees at least 60 days before the effective date of the change.
In plan years beginning on or after January 1, 2014, a group health plan may not apply any waiting period that exceeds 90 days. A waiting period is the period of time that must pass before coverage for an employee or dependent who is otherwise eligible to enroll under the terms of the plan can become effective.
Exchanges are expected to begin operating in 2014 as an option for individuals to buy private health insurance.Exchanges will also operate a small business health options program (SHOP) as an option for qualified small employers to purchase employee health coverage. Businesses with up to 100 employees will be eligible to participate in SHOPs, although states may limit participation to businesses with up to 50 employees until 2016.
Non-grandfathered plans offered in the small group market (both inside and outside of exchanges) must cover a core package of items and services known as â€œessential health benefitsâ€ beginning in 2014. Proposed rules have been issued which outline issuer standards related to coverage of these essential health benefits
The temporary exception for grandfathered plans from the requirement that dependents be covered to age 26 (which currently allows the exclusion of adult children who are eligible to enroll in an employer-sponsored health plan other than the group health plan of a parent) no longer applies for plan years beginning on or after January 1, 2014. As a result, both grandfathered and non-grandfathered group health plans that cover dependents must make coverage available until a child reaches age 26, regardless of other coverage options.
Beginning in 2014, employers with 50 or more full-time equivalent employees may be required to make an annual shared responsibility payment if any full-time employee is certified to receive a premium tax credit or cost-sharing reduction payment.
Note: Proposed rules have been issued which provide that an employer who is subject to the requirements would generally be treated as offering coverage to its full-time employees for a calendar month if, for that month, it offers coverage to at least 95% of its full-time employees. Under the proposed rules, after 2014, these provisions would apply to large employers that do not offer health coverage or that offer coverage to less than 95% of full-time employees and their dependents (i.e., children under 26 years of age).
Coverage is unaffordable for an employee if the required contribution for self-only coverage exceeds 9.5% of household income for the taxable year. (At least through the end of 2014, employers may rely on a number of safe harbors for determining if the coverage offered is affordable, including reliance on the employeeâ€™s Form W-2 wages.) An eligible employer-sponsored plan generally provides minimum value if the plan pays for at least 60% of covered health care expenses
For plan years beginning on or after January 1, 2014, issuers offering non-grandfathered group plans must accept every employer that applies for coverage, with certain exceptions. Issuers that offer coverage in the small group market must limit any variation in premiums with regard to a particular plan or coverage to age and tobacco use (within limits), family size, and geography. Proposed rules have been issued to implement these requirements.
All annual dollar limits on coverage of â€œessential health benefitsâ€ are prohibited for group health plans issued or renewed beginning January 1, 2014.
Also effective for plan years beginning on or after January 1, 2014, group health plans are not permitted to exclude individuals from coverage or limit or deny benefits on the basis of preexisting medical conditions. (Group plans are currently subject to this requirement only with respect to children under 19 years of age).
For up to two years starting in 2014, eligible small businesses (generally those with fewer than 25 full-time equivalent employees with average annual wages below $50,000) that buy health coverage through a SHOP and pay at least half of the premium cost for employees may receive a tax credit of up to 50% of the contribution.
Wellness programs that require an individual to satisfy a standard based on a health factor in order to obtain a reward must comply with specific nondiscrimination rules under HIPAA (the Health Insurance Portability and Accountability Act). For plan years beginning on or after January 1, 2014, the maximum permissible reward that may be offered for such programs is increased from 20% to 30% of the cost of coverage (proposed rules further raise the maximum from 20% to 50% for wellness programs designed to prevent or reduce tobacco use).