Healthcare Reform

The Affordable Health Care Act, a health care law, was passed in 2010.  By 2014 several health reform provisions will come into effect.  Unfortunately, with so many unanswered questions and loopholes, healthcare reform continues to confuse and bewilder employers.  Hopefully the below will provide some guidance.

For fully insured employers with 51+ employees, 2012-2013 health reform provisions include:

1. Limit employee contributions to FSAs.  Starting in 2013, employee salary reduction contributions to health FSA's will be limited to $2,500 per plan year, with indexed increases allowed in future years to adjust for inflation.
2. Employers who file 250 or more employee W-2 forms will be required to report the cost of employee's health benefit coverage on the employee's 2012 W-2 forms that are distributed in January 2013.   This requirement is informational only and does not mean that employees will be taxed on these dollars.
3. Provide written notice about Health Benefit Exchanges (Exchanges).  In late summer or fall (future guidance is expected on complying with this notice requirement), employers must provide written notice to current employees, and going forward, new employees, to inform them of the Exchanges and the circumstances under which they may be eligible for health insurance subsidies.
4. Assess health plan offerings.  Employers should begin assessing their health plan offerings to determine whether they meet the minimum value requirements that will become effective in 2014.  If plans do not meet the requirements, employers will need to explore alternative plan options/or the impact of paying assessments.
5. Requirements for providing the Summary of Benefits and Coverage (SBC) to your employees.  On or after September 23, 2012, group health plans and health insurance issuers offering group or individual health insurance coverage are required to provide an SBC that accurately describes the benefit and coverage under the applicable plan or coverage. The final regulations require that the SBC be provided in several instances (upon application, by the first day of coverage if there are any changes, special enrollees, upon renewal, upon request and off-renewal changes.)

2014 Health Reform Provisions.  Although the below provisions will not become effective until 2014, it is important for employers to know what is coming and what action is required!

1. Offer Minimum Essential Coverage (MEC).  Employers will want to consider whether they need to make changes to the cost and quality of the coverage offered to avoid penalties that will apply if that coverage is considered unaffordable or low in value.  Beginning in 2014, employers with 50-plus full-time employees may be subject to a penalty if an employee receives a premium credit or cost-sharing subsidy. The penalty is calculated as follows:
1. Employers not offering coverage.  If an employer does not offer MEC and one or more full-time employees receive a premium credit or cost-sharing subsidy through the Exchange, the penalty is $2,000 per year per full-time worker.  When calculating the penalty, the first 30 full-time workers are subtracted from the payment calculation.
2. Employers Offering Coverage:  If an employer offers MEC and one or more full-time employee receives a premium credit or cost-sharing subsidy through the Exchange, the penalty is $3,000 per employee who receives a premium credit or cost sharing subsidy.
2. An employer-sponsored plan that satisfies the ACA's reform requirements must:
1. Be affordable to the employee (premium must not exceed 9.5 percent of household income.  The IRS, however, has issued a safe-harbor allowing employers to substitute the employee's W-2 income for household income).
2. Provide minimum value, which is at least 60% of the total allowed cost of benefits.