Skip to main content
A Better Partnership

Publications

Sep 2012
06
September 06, 2012

Health Care Reform - Mandate Timeline


Are you overwhelmed by health care reform? Here’s a quick glance at the major changes affecting employers. Use this as a checklist for changes that should have been already implemented and for upcoming, pending changes. Consult your Warner Norcross & Judd Employee Benefits attorney to review the impact of these changes on your employee benefit plans.

Effective for Taxable Years beginning on or after January 1, 2010
Change What It Means Applies to Grandfathered Plans?
Small Business Tax Credit Employers who maintain a qualified health plan and have fewer than 25 full-time equivalent employees who earn less than an average of $50,000, are eligible to receive a tax credit for up to 35% of group health insurance premiums paid under the plan and 25% for small tax-exempt employers such as charities. The amount increases to 50% and 35% respectively on January 1, 2014. A plan’s grandfathered status will not affect eligibility
Adoption Tax Credit Increased The limit on the tax credit for adoption assistance expenses and the amount that may be excluded from income under an adoption assistance reimbursement program is increased to $13,360 for 2011. For 2012, the amount of the credit dropped to $12,650 and will no longer be refundable to the taxpayer. The adoption tax credit is scheduled to sunset after 2012. A plan’s grandfathered status will not affect eligibility
Effective June 21, 2010
Change What It Means Applies to Grandfathered Plans?
Early Retiree Reimbursement Program This application-based program reimbursed employer-sponsored plans for some benefits provided to retirees between the ages of 55 and 64. Reimbursement wasavailable for 80% of benefits costing between $15,000 and $90,000. The program was temporary. The Secretary of Health and Human Services stopped taking new applications for the program on May 5, 2011 and stopped accepting claims incurred after December 31, 2011 as the program’s $5 billion funding has been depleted. A plan’s grandfathered status will not affect eligibility for the credit
Temporary High Risk Insurance Pool This national program was created to provide health coverage to individuals with pre existing conditions who have not had insurance for at least six months. If the $5 Billion earmarked for these programs is exhausted before 2014, the programs will sunset absent Congressional action to increase federal funding. N/A
Effective for Plan Years beginning on or after September 23, 2010
Change What It Means Applies to Grandfathered Plans
Coverage of Dependents Up to Age 26 Plans offering dependent coverage for children must provide coverage for adult children of covered employees until age 26. The requirement applies regardless of the child’s marital or student status. This coverage is not taxable to the employee or child. Yes, but until 2014 grandfathered plans do not have to provide coverage if the child is covered under another employer-sponsored plan (other than the plan of a parent)
No Lifetime Limits Plans may not impose lifetime limits on the amount of “essential health benefits” that will be covered. Limits on benefits that are not “essential health benefits” are permitted. We are expecting further clarification on “essential health benefits” in the last quarter of 2012.  Yes
Restricted Annual Limits Annual limits on “essential health benefits” are being phased out from 2010 through 2013 and will be completely prohibited beginning in 2014. Limits on benefits that are not considered “essential health benefits” are permitted. Yes
No Rescission of Coverage Plans are prohibited from retroactively terminating a participant’s coverage, except for fraud or intentional misrepresentation. Plan Administrators that desire to rescind coverage for these reasons should include appropriate language within the plan document. Yes
Pre-Existing Condition Exclusions Limited Plans may not have pre-existing condition exclusions for children under age 19. Pre-existing condition exclusions may not be imposed for any participant in plan years
that begin on or after January 1, 2014.
Yes
Nondiscrimination Rules Imposed Nondiscrimination rules similar to those that currently apply to self-insured plans will now apply to fully insured plans as well. These rules will prohibit discrimination in favor of highly compensated individuals. While these rules were technically effective for Plan Years beginning on or after September 23, 2010, guidance regarding these requirements has not yet been issued. IRS officials have stated that they will not enforce this requirement, nor will employers be subject to excise taxes, until this guidance is issued. Any future guidance will be prospective in nature. No
Preventative Care Coverage Requirements Plans must provide certain preventive care coverage without cost to employees, including health screenings, preventive care for children and some immunizations. No
Patient Protections Participants may designate a participating primary care provider of their choice. If the plan covers emergency hospital care, it must do so without requiring prior authorization and with the same requirements and costs as in network services, regardless of whether the service provider is a participating provider. If the plan covers obstetrical and gynecological care, no referrals or prior authorization may be required. No
Claims and Appeals Procedures Plans must implement required internal and external claims and appeals procedures and provide written notice to participants describing the procedures. Some of these requirements were modified in 2011. No
Quality of Care Reporting Requirements Plans must provide reports to the Secretary of Health and Human Services (HHS) and participants regarding quality of care, and to the Secretary of HHS regarding data to be made public. Still waiting for guidance on reporting requirements and actual implementation date. No
Effective January 1, 2011
Change What It Means Applies to Grandfathered Plans?
Grants to Small Employers to Establish Wellness Programs The Secretary of HHS will award grants to eligible employers for wellness programs. An employer is eligible if it has fewer than 100 employees who work 25 hours or more per week and if it did not have a wellness program prior to March 23, 2010. We are still waiting for HHS to roll out this program. N/A
Long-Term Care Payroll Deductions Although the Act designed a program that would allow employees to participate in a new national long-term care insurance program by making contributions through voluntary payroll deductions, this program was deemed unworkable and HHS announced in 2011 that it would not be implemented. N/A
Effective for Taxable Years beginning on or after January 1, 2011
Change What It Means Applies to Grandfathered Plans?
No Reimbursement for Over-the-Counter Medicines The costs of over-the-counter medications (except for immunizations and insulin) acquired without a prescription are no longer eligible for tax-free reimbursement under a group health plan, including flexible spending accounts (FSAs), health reimbursement arrangements (HRAs) or health savings accounts (HSAs). N/A
Penalties Increased for HSA Withdrawals Eligible small employers may establish a “simple cafeteria plan,” which will be treated as automatically meeting the nondiscrimination rules for qualified medical expenses are increased to 20% (from 10% for HSAs and 15% for Archer MSAs). N/A
"Simple Cafeteria Plan" Eligible small employers may establish a “simple cafeteria plan,” which will be treated as automatically meeting the nondiscrimination rules for group term life insurance, health plans, cafeteria plans and dependent care assistance programs. Employers with an average of 100 or fewer employees in the preceding two years are eligible. Minimum contribution and eligibility requirements must be met. N/A
Effective beginning January 1, 2012
Change What It Means Applies to Grandfathered Plans?
Cost of Benefits on W-2 Employers who issued more than 250 Form W-2s in the previous calendar year are required to disclose the aggregate value of employer-sponsored medical coverage beginning with the 2012 Form W-2 issued in January 2013. Yes
Effective March 1, 2012
Change What It Means Applies to Grandfathered Plans?
Notice Regarding Exchange Employers must notify employees of the existence of Exchanges, the standards for receiving a subsidy under the Exchange and the consequences of purchasing a policy through an Exchange. Yes
Effective for Plan Years beginning on or after August 1, 2012
Change What It means Applies to Grandfathered Plans?
Women's Preventive Care Extensive preventive care requirements such as the provision of well-woman visits, gestational diabetes screening, contraceptives, HPV DNA testing, sexually transmitted infection testing, HIV testing, breastfeeding counseling and equipment, and other services must be provided with no-cost sharing if provided in-network. Yes
Effective for Plan Years ending after September 30, 2012 (generally this means Plan Years beginning on or after  10-1-2011)
Change What It Means Applies to Grandfathered Plans?
Annual Fee on Health Insurance and Self-Insured Plans An annual fee of $2 ($1 during the first year) times the average number of covered lives under a health plan will be assessed to finance the Patient Centered Outcomes Research Trust Fund. The fee is specifically imposed on policy issuers of health insurance and sponsors of self-insured health plans through 2019. Yes
Summary of Benefits and Coverage Plans must provide a summary of benefits and coverage and a uniform glossary that accurately describes benefits to employees prior to enrollment, using a specified template. The SBC and glossary must be provided by the first day of any annual open enrollment period that begins on or after September 23, 2012 and for later enrollees with the first day of the first plan year that begins on or after September 23, 2012. Yes
Effective for Taxable Years beginning on or after January 1, 2013
Change What It Means Applies to Grandfathered Plans?
New Health FSA Contribution Limit Health FSA salary reduction contributions are limited to $2,500 each year. This limit does not apply to employer health FSA contributions. N/A
No Medicare Part D Subsidy Deduction There will no longer be a deduction available to employers for the cost of providing prescription drug coverage to participants eligible for Medicare. N/A
Medicare Payroll Tax Increase An increased Medicare payroll tax of 0.9% will apply to wages of an individual taxpayer in excess of $200,000 ($250,000 in the case of a married taxpayer filing jointly). N/A
Effective for Taxable Years beginning on or after January 1, 2014
Change What It Means Applies to Grandfathered Plans?
Play or Pay Penalties Begin Employers with at least 50 employees will be assessed a fee of $2,000 per full-time employee, excluding the first 30 employees, if they do not offer health plan coverage and have at least one full-time employee who receives a premium tax credit. Employers with more than 50 employees that offer coverage but have at least one full-time employee receiving a premium tax credit, will pay the lesser of $3,000 for each employee receiving a premium credit or $2,000 for each full-time employee, excluding the first 30 employees. N/A
Exchange Coverage for Small Employers Small employers may obtain coverage for employees through an Exchange. An employer with less than 100 employees will be considered small unless a state limits small employers to those with less than 50 employees. N/A
New IRS Reporting Requirement Employers will have to begin reporting to the IRS about the health plan coverage made available to employees.  
Effective for Plan Years beginning on or after January 1, 2014
Change What It Means Applies to Grandfathered Plans?
Automatic Enrollment Health FSA salary reduction contributions are limited to $2,500 each year. This limit does not apply to employer health FSA contributions. No
All Pre-Existing Conditions Prohibited Plans may not impose pre-existing condition exclusions on any participants. Yes
Annual Limits Prohibited Plans may not impose any annual limits. Yes
Wellness Reward Limit Increases The maximum reward permitted under wellness plans increases from 20% to 30% of the cost of coverage. Regulators may choose to increase this limit to any amount up to 50%. N/A
Waiting Period Prohibited Plans may not impose a waiting period of more than 90 days. Yes
Cost-Sharing Limits A plan may not have cost-sharing in excess of the out-of-pocket limits that are applicable to high-deductible health plans. Currently these limits are: $6,250/individual, $12,500 /family in coverage. The maximum deductible will also be limited to $2,000 for individual coverage and $4,000 for family coverage. No
Clinical Trials Protected Plans must cover participation costs for certain medical expenses incurred during clinical trials. No
Temporary Reinsurance Payments Required Health insurers and TPAs on behalf of self-insured group health plans will be required to report and make reinsurance contributions on a quarterly basis beginning January 15, 2014. Each contributing entity must pay a per capita amount for each plan enrollee who resides in a particular state. Yes
Effective Beginning January 1, 2017
Change What It Means Applies to Grandfathered Plans?
States May Open Exchange to Large Employers States may, but are not required to, open the Exchanges to employees of large employers (over the 50- or 100- employee threshold set in 2014). Yes
Effective Beginning January 1, 2018
Change What It Means Applies to Grandfathered Plans?
Cadillar Tax on High Cost Plans If the value of employer-sponsored coverage exceeds a threshold amount ($10,200 for single coverage and $27,500 for family coverage), a 40% excise tax will apply to the amount of coverage that exceeds the threshold. The tax applies to coverage providers, including insurers of insured plans, administrators of self-insured plans or FSAs and employers contributing to an HSA or Archer MSA. Yes

 


This chart supersedes the chart published in the Spring, 2010 issues of this newsletter.

Please note that we are expecting clarifying guidance on a number of these requirements and further developments may modify the content of this chart.

NOTICE. Although we would like to hear from you, we cannot represent you until we know that doing so will not create a conflict of interest. Also, we cannot treat unsolicited information as confidential. Accordingly, please do not send us any information about any matter that may involve you until you receive a written statement from us that we represent you.

By clicking the ‘ACCEPT’ button, you agree that we may review any information you transmit to us. You recognize that our review of your information, even if you submitted it in a good faith effort to retain us, and even if you consider it confidential, does not preclude us from representing another client directly adverse to you, even in a matter where that information could and will be used against you.

Please click the ‘ACCEPT’ button if you understand and accept the foregoing statement and wish to proceed.

ACCEPTCANCEL

Text

+ -

Reset