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On March 23, 2010, President Obama signed into law the Patient Protection and Affordable Care Act (“PPACA”). Seven days later, President Obama signed the Health Care and Education Reconciliation Act of 2010, which amended certain provisions of PPACA. PPACA, as amended, forms what we have come to know as “health care reform.”
While PPACA will certainly change the daily lives of physicians and health insurers, health care reform will also have a major impact on employers and employment-based professionals—including small business owners and human resource executives.
Below is a snapshot of seven items that will have a large impact on employers and employment-based professionals.
1) W-2 Reporting of Health Benefits: Effective for tax years after December 31, 2010, all employers will be required to report the value of health benefits on IRS Form W-2.
2) Small Business Health Care Tax Credit: A new tax credit is available to various “small employers” and tax-exempt organizations that provide health insurance coverage for employees and pays at least 50% of the health care premium for the qualifying workers. The credit takes effect for tax years beginning in 2010. The tax credit can range anywhere from 35%-50% of the cost of the premium by 2014-15.
3) Penalties for Failing to Provide Affordable Health Coverage: Beginning in 2014, employers with 50 or more full-time employees that do not provide any health coverage will be taxed $2,000 per full-time employee. (The first 30 full-time employees will be disregarded in calculating the tax amount.) Employers who provide “unaffordable” coverage to its employees, but who have at least one full-time employee who receives a premium tax credit subsidy toward the purchase of health insurance in a health insurance exchange, will be taxed in the amount of $3,000 per employee receiving such premium credit.
4) Changes to Health Flexible Spending Accounts: Effective 2011, a health flexible spending account (FSA) may no longer provide reimbursement for over-the-counter medications. Additionally, effective 2013, a health FSA must limit contributions from salary reductions to an annual amount of $2,500 per individual.
5) Early Retiree Reinsurance Program: This program covers “early retirees” who are: (a) age 55 or older, but not yet eligible for Medicare; and (b) not active employees of an employer currently contributing to an employer-based plan. This program began issuing reimbursements on June 1, 2010. Due to limited funds, employers are encouraged to apply as soon as possible.
6) Changes to Group Health Plans: Employers will be required to amend their group health plans for plan years beginning on or after September 23, 2010, to reflect material changes to the administration of these plans. Some of the noteworthy provisions include:
· Pre-Existing Conditions – Plans cannot exclude coverage for pre-existing conditions of children under 19 years of age.
· Annual/Lifetime Limits – Lifetime limits are prohibited on “essential health benefits,” a term which has not been defined by regulation.
· Prior Notice of Cancellation – Employees must be provided with prior notice of cancellation of coverage.
· Dependent Coverage for Adult Children – Employers must provide dependent coverage to adult children until age 26. Grandfathered plans are only required to offer such coverage if the adult child is not eligible to enroll in an employer-sponsored plan (through 2013).
· Non-Discrimination – Plans cannot discriminate in favor of highly compensated individuals with respect to eligibility or benefits.
· Primary Care Providers – Plans must permit participants to choose any participating primary care provider, if the plans require that the individual must designate one.
· Pre-Authorization – Plans cannot require prior authorization for OB/GYN care, or for emergency care provided by out-of-network providers.
· Emergency Coverage – Emergency care, if covered, must be covered under both in- and out-of-network.
· Claims Appeals – there must be an internal and external claim appeal process, and employees must be given notice of their appeal rights in “culturally and linguistically appropriate” form.
7) Unpaid Break for Nursing Mothers: Employers are required to provide reasonable, unpaid breaks for nursing mothers to express milk.
It is important to note that the federal regulations that actually implement and enforce PPACA are constantly changing and evolving. Additionally, it is important to remember that this article only serves as a snapshot of items that will impact the lives of employers, no matter how small. The continued challenge lies in determining how health care reform will impact your specific company. Please feel free to visit our website at www.Brunini.com where we have a dedicated link to healthcare reform materials.
This Newsletter is a publication of the Labor and Employment Department of the law firm of Brunini, Grantham, Grower & Hewes located in Jackson, Mississippi.. The Newsletter is not designed or intended to provide legal or professional advice, as any such advice requires the consideration of the facts of the specific situation.
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