The Affordable Care Act: 2012 Employer Checklist
UPDATE: THIS ARTICLE WAS WRITTEN PRIOR TO THE HEALTH INSURANCE MANDATE BEING DELAYED UNTIL 2016 FOR SELECT EMPLOYERS. READ ENA’S MOST RECENT ACA ALERT HERE.
The Affordable Care Act (“ACA”) has employers scratching their heads wondering whether it applies to them and, if it does, how they will comply. No wonder, the actual legislation itself has over 2,400 pages and the majority of the regulations implementing the ACA have not been published yet. Notices of rulemaking and requests for public comment regarding proposed regulations are being issued almost daily from, among others, the United States Office of Personnel Management, Department of the Treasury, and the Internal Revenue Service.
There are a number of new requirements in the ACA that a covered employer will need to monitor and/or comply with now, in the near future, and in the not so distant future. The first real challenge arises out of the term “covered employer.” For some provisions, all employers and health plans are covered. For other provisions, employers must employ a certain number of employees (25, 50, 100, 200, 250) working an average number of hours, for a certain number of months. Another issue that further complicates the applicability of the ACA is whether a group or individual health plan is grandfathered (meaning it was in effect on March 23, 2010). Certain provisions do not apply to grandfathered plans.
This article will provide an overview of provisions of the ACA that are already in effect. Employers will need to look closely to see what, if any, provisions apply to them.
Informational Reporting of Value of Employer-Sponsored Group Health Plans
- Must be reported on 2012 W-2 Statements.
- Mandatory for employers who filed 250 or more W-2 statements in the previous year.
- Refer to IRS publications for specific coverage types that must be reported (Notice 2012-9).
Summary of Benefits and Coverage (SBC)
- Beginning September 23, 2012, health insurers and self-insured group health plans must provide a SBC to all individuals enrolling in medical coverage.
- This information must be provided to employers and individuals when shopping for coverage, enrolling in coverage, at each new plan year, and within seven business days of requesting a copy from their health insurance issuer or group health plan.
- Sample provided at http://cciio.cms.gov/resources/files/sbc-sample.pdf.
Limits on Flexible Spending Accounts (FSAs)
- $2,500 Limit.
- Applies to employee salary reduction, but can apply to employer contributions under certain scenarios, for example if a cash option is available.
- Must be described in open enrollment materials in Fall 2012 for plan year 2013.
Research Fund Fee
- Annual fee to fund patient-centered outcomes research.
- In effect for limited number of years –2012 to 2019.
- Does not apply to health insurance policies if substantially all of the coverage is of excepted benefits (e.g., accident- or disability-only plans or limited-scope dental or vision plans), employees are primarily working and residing out of the United States, and stop loss and indemnity reinsurance policies.
- $1 times the average number of members under the health plan for policy years or plan years ending on or after October 1, 2012;$2 times the average number of members for health plans ending after September 30, 2013; increases 6.6 to 7% per year until 2019.
- For self-funded plans, the plan sponsors are responsible for paying the fee.
- For insured plans, the health insurance issuers are responsible for paying the fee.
Medical Loss Ratio Rebate Requirements
- Beginning in August, 2012, insurers report plan costs for the purpose of calculating the insurers’ medical loss ratio (the percentage of insurance premium dollars spent on reimbursement for clinical services and activities to improve health care quality).
- Large group insurers must spend at least 85% of premium dollars on claims and activities to improve health care quality.
- Individual and small group insurers (1 to 50 total average employees based on the preceding calendar year-depending on state’s definition) must spend at least 80% of premium dollars on claims and activities to improve health care quality.
- Special considerations for small plans, new plans, mini-med and expatriate plans are accounted for in the program.
- Rebates paid to subscriber, policyholder, and/or governmental entity that paid the premium and must be paid by August 1 following the end of the reporting year.
Employers face challenges and uncertainty as they attempt to navigate this new law. Employers need to take action to comply with the immediate requirements of the ACA, closely monitor upcoming requirements, and make necessary adjustments as additional regulations are issued.
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