The health care reform legislation passed by Congress places significant new responsibilities on employers, group health plans, insurers, and individuals. The Stoel Rives Employee Benefits team has developed the following overview of the most significant issues affecting employers and group health plans, in order of effective date. (click on CONTINUE READING" for the full text of the overview).
- Qualifying small businesses that have fewer than 25 full-time employees and whose employees have average annual wages less than $50,000 may be eligible for tax credits to purchase health insurance for their employees.
- Coverage for dependent children may qualify for tax-free status through the taxable year in which the child turns age 26.
Effective Date Dependent upon Issuance of Regulations
- Employers with more than 200 employees must automatically enroll employees into health insurance plans offered by the employer.
Effective June 20, 2010
- A temporary reinsurance program will reimburse participating employment-based plans for a portion of the cost of providing health coverage to early retirees and eligible dependents (ending January 1, 2014).
Effective for Plan Years Starting October 1, 2010 or Later
- Plans cannot place lifetime dollar limits on coverage.
- Adult children must be covered until age 26 (for grandfathered plans*, adult children must only be covered if they do not have access to their own employer-sponsored coverage).
- Annual dollar limits on coverage must comply with guidance from the Secretary of Health and Human Services. The Secretary must issue such guidance on annual limits by June 20, 2010.
- Plans cannot have pre-existing condition exclusions for children under age 19.
- New plans** must provide preventive services and immunizations without any cost sharing.
- New plans must meet internal and external review procedure standards for claim determinations.
- Nondiscrimination rules formerly applicable only to self-funded group health plans are now applicable to new insured group health plans.
Effective January 1, 2011
- Employers must report the value of employer-provided health coverage on each employee’s W-2 form.
- Nonprescription drugs cannot be reimbursed tax-free through a health savings account (HSA).
- Nonprescription drugs cannot be reimbursed through health reimbursement arrangements or health flexible spending accounts (FSA).
- The tax on HSA distributions not used for qualified medical expenses will increase to 20 percent.
Effective 24 months after enactment (March 2012)
- Plans must provide participants with a four-page summary of benefits, in accordance with regulations that must be issued within 12 months of enactment (March 2011).
- Plans must provide notice 60 days before plan changes.
Effective January 1, 2013
- The Medicare Part A (hospital insurance) tax rate on earnings over $200,000 ($250,000 for married couples filing jointly) will increase from 1.45 percent to 2.35 percent (only the employee portion is increased, not the employer portion), and there will be a 3.8 percent tax on unearned income for high-income taxpayers.
- There will no longer be a tax deduction for employers who receive Medicare Part D retiree drug subsidy payments.
- Health FSA contributions will be limited to $2,500 annually.
Effective January 1, 2014
- Plans cannot have pre-existing condition exclusions for adults (age 19 and over).
- Plans cannot have annual dollar limits.
- Employers will be required to separately report the value of an employee’s health benefits to the federal government (in a form to be developed).
- Waiting periods for coverage will be limited to 90 days.
- Employers can offer employees rewards of up to 30 percent of the value of coverage for participating in wellness programs and meeting certain health-related standards.
- Children must be covered until age 26 even if they have access to their own employer-sponsored coverage.
- Employers that have more than 50 employees and do not offer coverage must pay a $2,000 fee per full-time employee (excluding the first 30) if any of their full-time employees receive a premium tax credit.
- Employers that have more than 50 employees and offer coverage but have at least one full-time employee receiving a premium tax credit must pay a $2,000 fee per full-time employee or $3,000 fee per employee receiving the tax credit (whichever is less).
- Employers that offer coverage must offer low-income employees a “free choice voucher” that the employee can use to apply the value of the employer-provided coverage to the cost of enrolling in a state-based Health Benefit Exchange.
Effective January 1, 2018
- An excise tax will be imposed on health insurance issuers and plan administrators of employer-sponsored health plans with aggregate values that exceed $10,200 for individual coverage and $27,500 for family coverage. The tax will be equivalent to 40 percent of the value of the plan that exceeds the threshold amounts. Vision and dental coverage will not be counted as part of value of employer-sponsored coverage if it is provided under a separate policy, certificate, or contract of insurance.
For more information on how the new federal health care reform legislation will affect you, please contact your Stoel Rives attorney or a member of the Stoel Rives Employee Benefits team.
* A grandfathered plan is a plan in effect on the date of the enactment of the health care reform bills. Certain provisions of the law do not apply to grandfathered plans, and other provisions of the law have delayed effective dates for grandfathered plans.
** New plans are plans that are not grandfathered.