Healthcare Reform: General Impact & Application
By: Daniel E. Clevenger
Grandfathered Health Plans
Effective: Grandfathered health plan status is available for plans including self-insured plans in effect on the date of enactment - March 23, 2010.
New Regulations
By: Daniel E. Clevenger
July 2010
What We Know
1. Employer groups can keep their grandfathered status only if the changes made by the plan relate to adding or deleting new employees or new dependents.
2. A grandfathered plan is not required to incorporate some of the mandates of the PPACA.
3. An exception is made for employers that have scheduled plan changes as a result of a CBA.
What We DO NOT Know
1. It is not clear what other changes are permissible to a plan that could cause it to lose its grandfathered status. For example, do changes such as increases or decreases in co-pays or deductibles trigger a loss of the grandfather status?
2. Further guidance is expected from the DHHS relative to what changes are permissible.
Caveat
As will be discussed the Reconciliation Bill also eliminates certain grandfathered protections to a number of important provisions.
Federal Study of Self-Insured Plans
Effective: March 23, 2011
1. Mandates annual studies by DOL on self-insured plans using data collected from the annual return/report of employee benefit plan - DOL Form 5500.
2. Studies will include plan type, number of participants, benefits offered, funding arrangements, as well as data from the financial filings of self-insured employers.
Uniform Summary of Coverage and Benefits Explanation
Effective: No later than March 23, 2012
1. Explanation requirement applies to both grandfathered and non-grandfathered plans.
2. Format and content will be established by future regulations which are due by March 23, 2011.
3. Law requires employers to provide 60 days' prior written notice of any material change to the benefits described in the plan.
4. Penalty for willful failure to provide notices could result in fines up to $1,000 per day.
Employer Health Care Mandate
Effective: January 1, 2014
Application: An employer with more than 50 employees including part-time employees based on an aggregate number of hours of service.
1. A qualifying employer does not have to offer health care coverage, BUT if they fail to offer health care coverage and they employ more than 50 employees, and one or more employees receives a premium assistance tax credit to buy coverage through an exchange, the employer must pay an annual fine of $2,000 per full-time employee.
2. The first 30 employees are exempted from the fine.
3. An employer with more than 50 employees that does offer coverage BUT has at least one full-time employee receiving the premium assistance tax credit will pay the lesser of $3,000 for each of those employees receiving a tax credit or $2,000 for each of their total full-time employees.
4. An individual with family income up to 400% of the FPL is eligible for a premium assistance tax credit if the actuarial equivalent cost of the employer's coverage is less than 60% or the employer requires the employee to contribute more than 9.5% of the employee's family income toward the cost of coverage.
Exception
For the construction industry only, the requirement to provide affordable coverage applies to employers of more than 5 people with annual payrolls in excess of $250,000.
Employer Reporting Requirements
Effective: January 1, 2014
1. Employers of both grandfathered and non-grandfathered plans must report to the IRS by January 31 of the following year whether full-time employees (including dependents) were offered minimum essential coverage, the length of any waiting period, the premium for the lowest cost option, the employer's share of total plan costs, the number of full-time employees and other information.
2. Reported information must also be provided to each full-time employee of the employer.
For more information on how healthcare reform will impact your business please attend the Healthcare Seminar this June 2010 or contact Daniel E. Clevenger