Healthcare Reform

Helping you prepare for the impact of Health Care Reform.

Introduction

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ealth Care Reform (HCR) has many moving parts. Helping you prepare for the impact health care reform will have on your benefits program is a top priority for Haven Benefits. The chart below is a timeline with important information about how Health Care Reform has been (and will be) implemented. In addition to this tool, you also will find additional helpful information on our blog posts about the Affordable Care Act.

As always, the best thing to do is contact us with any specific questions you may have regarding HCR and how it impacts your organization.

 

 

Health Care Reform Timeline

  • Grandfathered Plans Status: PPACA grandfathered existing health plans and exempted them from some requirements. Changes to grandfathered plans were restricted (e.g., copay, deductible, and employee premium changes). Effective 3/23/2010 or the first renewal thereafter.
  • Elimination of Child Pre-Existing Conditions: Health plans can no longer have pre-existing exclusions for children under age 19.
  • Elimination of Lifetime Limits: Health plans can no longer have lifetime limits on essential benefits.
  • Essential Health Benefits Limited to 2014: All essential benefits are limited to an annual dollar limit of $750,000 in 2010, gradually increasing annually to $2,000,000 until 2014.
  • Preventive Care Enhancement: Preventive care and immunizations covered at 100% with no cost-sharing to employee/member¹.
  • Coverage Extended to Young Adults: Adult dependent children covered on parents plan to age 261,2.
  • Patient Choice Protections: Members have the right to select their choice of primary care physician, pediatrician and OB-GYN¹.
  • Emergency Care Enhancement: Emergency services must cost the same in-network as out-of-network¹.
  • Member Appeal Rights: Health insurance plans must implement internal and external claims review and appeals processes¹.
  • Prohibition on Rescission of Coverage: Health plans cannot be retroactively cancelled except for fraud or misrepresentation.
  • Premium Increases must be Reasonable : Health plans are required to justify “unreasonable” premium increases.
  • Temporary High Risk Pools : Established a temporary high-risk health insurance pool program for individuals who cannot obtain coverage in the private insurance market because of pre-existing medical conditions, which include mental health and substance use disorders. Made available for uninsured members with pre-existing conditions until exchanges open.
  • Employers Prohibited from Incentivizing High Risk Pool Enrollment: Employers are prohibited from offering incentives to employees for enrolling in high risk pool.
  • Mandatory Breaks for Nursing Mothers: Employers are required to provide reasonable break time and provide an appropriate private place for an employee to express milk for a nursing child for one year after the child’s birth.
  • Small Business Tax Credits: Small employers with less than 25 full-time employees, can receive a healthcare tax credit to help provide insurance for employees.
  • Early Retiree Coverage Expansion: Financial incentive for employment-based plans to continue to provide coverage to early retirees between the ages of 55 and 65, as well as their spouses and dependents.
  • Begin Elimination of Medicare Part D Coverage “Donut Hole”: $250 rebate to Medicare beneficiaries who reach the Part D coverage gap in 2010. Each year, further subsidies and discounts apply until the coverage gap is ultimately closed in 2020.
  • Non-discrimination Requirements : Under Section IRC Section 105(h), plans cannot give better benefits to higher paid employees. Provision delayed – December 2011.

 

¹ Applies to non-grandfathered health plans.

² Grandfathered plans only provide in cases where dependent can’t receive coverage by their employer.

  • Medical Loss Ratio (MLR ) Rebates: Health plans must report to HHS regarding loss ratios and must provide premium rebate to participants if loss ratio is below 85% for large groups and 80% for small groups.
  • Reimbursement Account Rules Tightened: Over the counter (OTC) drugs are no longer eligible for reimbursement under FSAs, HRAs, and HSAs (requires a prescription).
  • Health Savings Account (HSA) Distribution Tax Penalty: Ineligible HSA withdrawals are subject to 20% excise tax (increased from 10%).
  • Prescription Drug Manufacturer Fees: Annual fee for pharmaceutical manufacturers & importers with sales in excess of $5M. The annual fee or excise tax was established to help offset costs associated with Health Care Reform. Collected fees are credited to the Medicare Part B trust fund.
  • Small Employer Simple Cafeteria Plans: Provides employers with less than 100 employees the option of a simple cafeteria plan which removes the obstacle of nondiscrimination requirements favoring highly compensated and key employees and allows the employer to offer employees a choice between taxable and nontaxable benefits.
  • Income-related Premiums Begin for Medicare Part D: Applies the same fixed income thresholds that are applied to Part B premiums. The total amount that higher-income Part D enrollees pay will depend on the premium of the plan they select and their income.
  • W-2 Reporting of Employer Provided Health Care Coverage: Voluntary reporting in 2011. Employers with 250 or more W-2s must report in 2013 for the 2012 tax year. Employers with fewer than 250 W-2s are granted transitional relief – May 2011.
  • CLASS Act: Employers may elect to enroll employees in government run long term care insurance program. Program delayed January 2011, determined unfeasible – October 2011.
  • Review and Appeal Process Implementation Complete : Internal and external claims review and appeals processes fully implemented¹.
  • Women’s Health Amendment ¹ : Non-grandfathered plans without a religious exemption are required to cover additional preventive care services without charging a co-payment, co-insurance, or deductible (e.g., FDA-approved contraception methods, well-woman visits, etc.). Effective 8/1/2012 or the first renewal thereafter.
  • Summary of Benefits and Coverage: Health plans must provide plan participants with a standardized summary of benefits and coverage (SBC). Effective 9/23/2012 or the first renewal thereafter.
  • 60 Day Advance Notice of Material Modifications: Employer must provide the notice to the employee of any “important” or “significant” changes. The 60-day notice applies mainly to off-renewal and mid-year changes that meet the material modification definition. Effective 9/23/2012 or the first renewal thereafter.
  • Comparative Effectiveness Research Fee (CERF): Tax on individual and group health plans to fund the Patient Centered Outcomes Research Institute (PCORI) – $1 per member per year fee (fee increases each year until it is phased out in 2019). Effective 10/1/2012 or the first renewal thereafter.
  • Medical Loss Ratio Rebates Paid: Plans begin to receive Medical Loss Ratio (MLR) rebates.
  • W-2 Reporting of Employer Provided Health Care Coverage W-2 reporting of employer provided health care required for employers with 250 or more W-2s (e.g., W-2s issued January 2013 for 2012 tax year).
  • Quality Outcomes Reporting & Incentives : Health plans required to supply quality of care reports to improve the quality of health care and reduce costs.
  • Standardized Billing and Electronic Health Records: PPACA instituted changes to standardize billing and requires secure electronic exchange of information to reduce medical errors and improve the quality of care.

¹ Applies to non-grandfathered health plans

  • Medical FSA Contribution Limited: Medical/health FSA contributions are limited to $2,500. Effective 01/01/2013.
  • Retiree Drug Subsidy Deduction Ends: The subsidy, paid to employer plan sponsors, now becomes taxable income.
  • FICA Tax Rate Increased: FICA tax rate is increased to 6.2% on earnings up to $113,700 (previously 4.2%).
  • Two-tiered Medicare Tax: Medicare tax becomes two-tiered, with a 0.9% increase on individuals earning $200,000 or $250,000 if filing joint tax return.
  • New Tax on High Earner’s Investment Gains: Net investment (unearned) income Medicare tax of 3.8% imposed on high income individuals. Tax applied to investment income including interest, dividends, capital gains, rents, royalties and taxable portion of an annuity payout.
  • Medical Device Excise Tax : A tax of 2.3% is placed on the sale of medical devices as defined in Section 201(h) of the Federal Food, Drug, and Cosmetic Act.
  • PCORI Fee or CERF Increases (Comparative Effective Research Fee): Fee is increased to $2 per member per year fee (fee increases each year until it is phased out in 2019). Effective 10/1/2013.
  • Employer Exchange Notice Requirement: Employers are required to notify all employees and new hires on of the existence of the Exchange and possibility of a subsidy if employer contributes less than 60% of the cost of coverage. Effective 10/1/2013.
  • Administrative Simplification Begins: Health plans must file a statement with the HHS, certifying their compliance with HIPAA’s electronic transaction standards and operating rules.
  • Individual Mandate: All individuals required to have health coverage or pay penalty.
  • Market Reform and Coverage Expansions: Effective 01/01/2014 or the first renewal thereafter.
    • Pre-existing condition exclusions are removed for everyone
    • Coverage for approved clinical trials1,2
    • Annual Essential Health Benefits become unlimited1,2
    • Provider Nondiscrimination for a provider acting within scope of license,2
    • Out-of-pocket maximum and deductible cost sharing limits¹
    • Waiting periods for employee health plan coverage limited to no more than 90 days
    • Guarantee policy issue and renewability for all health plans¹
    • Child coverage to age 26 for all plans
    • HIPAA Wellness program incentive increased from 20% to 30% (50% for tobacco use)
    • Individual and Small Group Rating Restrictions
  • Gender & Health Status Rate Prohibition : In the individual and small group market, insurance carriers are prohibited from charging higher rates due to gender or health status.
  • PCORI Fee or CERF (Comparative Effective Research Fee ): Fee is increased to $2.08 per member per year fee (fee increases each year until it is phased out in 2019). Effective 10/1/2014 CERF increases by rate of medical inflation per average covered life.
  • Reinsurance Fee: Fee of $63 per member per year, established to lessen the impact of high risk individual entering the Exchange. Effective 2014-2016.
  • Insurance Industry Fee: Fee on medical, dental and vision to help fund federal and state Exchanges. The fee begins at ~2.3% of premium and increases to 4%. The actual fee amount is based on each carrier’s market share per year and may vary with each insurance carrier. Effective 2014.
  • Insurance Exchanges (Marketplace) Established. Individuals and small business can buy health benefit plans in the online marketplace. Small Business Health Options Program (SHOP) delayed until 2015.
  • Medicaid Expansion: Americans who earn less than 133% of the poverty level are eligible to enroll in Medicaid.
  • Increased Small Business Tax Credit: Increased the small business tax credit to up to 50% of the employer’s contribution to provide health insurance for employees. Credit is up to 35% for small non-profit organizations.
  • Individual Tax Credits: Made available for people with an income between 100% and 400% of the poverty line who are not eligible for other affordable coverage.
  • Excepted Benefits Amendment : Employee Assistance Programs (EAPs), long-term care benefits and limited scope dental and vision benefit plans are exempt from ACA reform provisions.
  • Medical/Health FSA Rollover: IRS released Notice 2013-71, relaxing the “use it or lose it” rule. Participants can carry over up to $500 in unused funds into the next year.
  • FSA Availability Limitation: IRS released Notice 2013-54 limiting the availability of health FSAs (must be offered through a cafeteria plan; must comply with ACA’s reforms for health FSAs; and health FSAs that do not qualify as excepted benefits are prohibited).
  • Auto-enrollment: Employers with 200+ employees are required to auto-enroll employees in health plans. Enforcement delayed.
  • Employer Mandate & Penalties : Employers with 100 or more full-time employees must provide minimum essential coverage that is affordable or pay a penalty. Provision delayed until 2015 for employers with 100+ full-time employees (FTEs) and until 2016 for employers with 50+ FTEs.
  • Employer Mandate Reporting: Employers must report to IRS minimum essential coverage paid for by the employer. Provision delayed until 2015.
  • Health Plan Identifier (HPIDs) & Using HPIDs in HIPAA Transactions (Health Plans with Annual Receipts of $5M+): HPIDs required by November 5, 2014, to improve standards for electronic transactions mandated by HIPAA. The intent is to reduce administrative costs by adopting a set of operating rules for each transaction and to create consistency in implementing electronic standards. Delayed On October 31, 2014, by the Department of Health and Human Services (HHS) until further notice.

¹ Applies to non-grandfathered health plans

² 2 Year Transition Relief for coverage in effect 10/01/2013. Option of renewing current policies prior to Oct. 1, 2016, without being non-compliant (<100 EEs).

  • Employer Mandate & Penalties: Employers with 100+ full-time employees must offer affordable health insurance that meets the minimum value or pay a penalty.
  • Employer Health Insurance Coverage Reporting: Applicable Large Employers (ALEs with 50+ full-time equivalent employees) must report on the medical coverage offered. Recorded in 2015 and reported in 2016.
  • Minimum Essential Coverage (MEC) Reporting : Insurers and self-insured groups are required to report on individuals covered under their health plans. Recorded in 2015 and reported in 2016.
  • PCORI Fee or CERF (Comparative Effective Research Fee): Increases by rate of medical inflation per average covered life (fee increases each year until it is phased out in 2019). Fee to be determined.
  • Reinsurance Fee: Fee of $44 per member per year, established to lessen the impact of high risk individual entering the Exchange. Effective 2014-2016.
  • Insurance Industry Fee : Fee on medical, dental and vision to help fund federal and state Exchanges. The fee increases from prior rate of ~2.3% of premium up to 4%. The actual fee amount is based on each carrier’s market share per year and may vary with each insurance carrier. Effective 2014.
  • Exchanges Open to CHIP Eligible: States can open Exchange to CHIP eligible.
  • Proposed Summary of Benefits and Coverage Modifications: Proposed regulations for changes to the Summary of Benefits and Coverage (SBC) to shorten the template, revise the uniform glossary, clarify when and how a plan administrator or insurer must provide an SBC, and add a third cost example. Proposed changes are to be effective for plan years and open enrollment periods beginning on or after September 1, 2015.
  • Health Plan Identifier (HPIDs) & Using HPIDs in HIPAA Transactions (Health Plans with Annual Receipts of less than $5M): HPIDs required by November 5, 2015, to improve standards for electronic transactions mandated by HIPAA. The intent is to reduce administrative costs by adopting a set of operating rules for each transaction and to create consistency in implementing electronic standards. Delayed On October 31, 2014, by the Department of Health and Human Services (HHS) until further notice.
  • Employer Mandate Expansion & Penalties: Mandate is extended to employers with 50-99 full-time employees. Employers must offer affordable health insurance that meets the minimum value or pay a penalty.
  • PCORI Fee or CERF (Comparative Effective Research Fee): Increases by rate of medical inflation per average covered life (fee increases each year until it is phased out in 2019). Fee to be determined.
  • Reinsurance Fee: Fee is ~$27 per member per year, established to lessen the impact of high risk individual entering the Exchange. Fee to be determined.
  • Insurance Industry Fee: Fee on medical, dental and vision to help fund federal and state Exchanges. The fee increases from 2014 rate of ~2.3% of premium up to 4%.The actual fee is based on each carrier’s market share per year and may vary by insurance carrier. Fee to be determined.
  • Small Employer Definition: Definition of small employer changes from 1-50 full-time employees to 1-100 full-time employees.
  • Employer Provided Health Insurance & Offer of Coverage Reporting: Applicable Large Employers (ALEs) with 50+ full-time equivalent employees must file an annual return, reporting the type of medical coverage provided to full-time employees for the calendar year. The IRS will use this information to assess any employer penalties and to determine which employees may be eligible for subsidies (Premium Tax Credits and Cost Sharing Reductions) if they purchase health insurance in the Exchange/Marketplace. Reporting is due for the 2015 calendar year on 01/31/16 to employees and on 03/01/16 to the IRS.
  • Minimum Essential Coverage Reporting: Insurers and self-insured employers must report annually to both the IRS and any individual named in the report whether the individual had Minimum Essential Coverage. The IRS will use this reporting to confirm individuals have complied with the “individual mandate.” Reporting is due for the 2015 calendar year on 01/31/16 to employees and on 03/01/16 to the IRS.
  • Health Care Choice Compacts: Health care to be sold across State lines when both States agree and consumer protections are maintained.
  • Health Plan Identifier (HPIDs) & Using HPIDs in HIPAA Transactions (All Plans that Generate Electronic Transactions): HPIDs required by November 7, 2016, to improve standards for electronic transactions mandated by HIPAA. The intent is to reduce administrative costs by adopting a set of operating rules for each transaction and to create consistency in implementing electronic standards. Delayed On October 31, 2014, by the Department of Health and Human Services (HHS) until further notice.
  • Offer Minimum Essential Coverage (MEC) / Minimum Value Requirement: Employers must provide their employees with a medical plan that meets the Minimum Value (MV) (e.g., plan must pay at least 60% of the covered services or Bronze level). Additionally, the plan must be considered affordable (e.g., employee contribution must be no more than 9.66% of the Federal Poverty Level or the employee’s W-2 or Rate of Pay).
  • Shared Responsibility Fee Employer Mandate – For Groups with 50+ Employees
    1. No Coverage Penalty: $2,260 times the total number of full-time employees (minus 30).
    2. Unaffordable Coverage Penalty: If an employee (EE) receives a subsidy through the Exchange, and the EE’s contribution is >9.69% of the Federal Poverty Level or the employee’s W-2/Rate of Pay or the EE pays more than 40% of the plans actuarial value, employer will pay the lesser of:
      • $3,390 fee for each full-time employee who receives premium assistance through an Exchange; or
      • $2,260 per full-time employee (minus 30)
  • Minimum Essential Coverage and Shared Responsibility Reporting (Section 6056 Reporting)
    1. Large employers must file information annually to the IRS pertaining to the fulfillment of employer coverage responsibilities and their offer to provide minimum essential coverage.
    2. Fully insured employer groups report Part I of Form 1095-C and self-funded employer groups report in Part I & II of Form 1095-C. For the 2017 reporting year, employees must receive Form 1095-C by 3/2/2018.
    3. Both fully insured and self-funded groups must file a Form 1094-C (transmittal form) to the IRS by 4/2/2018 if filing electronically.
  • Rating Restrictions: Rating restrictions applies for states that offer large group coverage through Exchange.
  • PCORI Fee or CERF (Comparative Effective Research Fee): Increases by rate of medical inflation per average covered life (fee increases each year until it is phased out in 2019). Fee to be determined. Fees incurred in 2016 and paid 7/31/2017.
  • Insurance Industry Fee: Fee on medical, dental and vision to help fund federal and state Exchanges. The actual fee is based on each carrier’s market share per year and may vary by insurance carrier. Fee to be determined. Moratorium during 2017 calendar year.
  • Summary of Benefits and Coverage (SBC) Update; All Plans Must Comply as of the 1st day of the plan year April 1, 2017+. SBC must: be four-pages (two-sided, eight pages maximum, 12-point font, in color or grayscale); include estimated costs for having a baby, managing type 2 diabetes, and emergency room treatment for a simple fracture; include a website and phone number where individuals can get additional information; include a Glossary of common medical/insurance terms; and provide information on whether the plan meets Minimum Essential Coverage/Minimum Value Standard.
  • Cadillac Plan Tax: Imposes a 40% tax on the value of coverage in excess of $10,200 for individuals and $27,500 for families. Delayed until 2022.
  • Shared Responsibility Fee Employer Mandate – For Groups with 50+ Employees
    1. No Coverage Penalty: $2,320 times the total number of full-time employees (minus 30).
    2. Unaffordable Coverage Penalty: If an employee (EE) receives a subsidy through the Exchange, and the EE’s contribution is >9.56% of the Federal Poverty Level or the employee’s W-2/Rate of Pay or the EE pays more than 40% of the plans actuarial value, employer will pay the lesser of:
      • $3,480 fee for each full-time employee who receives premium assistance through an Exchange; or
      • $2,320 per full-time employee (minus 30).
  • PCORI Fee or CERF (Comparative Effective Research Fee): Increases by rate of medical inflation per average covered life (fee increases each year until it is phased out in 2019). Fee to be determined. Fees incurred in 2017 and paid 7/31/2018.
  • Insurance Industry Fee: Fee on medical, dental and vision to help fund federal and state Exchanges. The fee begins at ~2.3% of premium and increases to 4%. The actual fee is based on each carrier’s market share per year and may vary by insurance carrier. Fee to be determined.
  • Cadillac Plan Tax: Imposes a 40% tax on the value of high-cost employer sponsored coverage. Threshold amounts are indexed to the Consumer Price Index for All Urban Consumers (CPI-U), as determined by the DOL, plus 1% point, rounded to the nearest $50. In 2019, the primary threshold amounts and additional $1,650 and $3,450 amounts are indexed to the CPI-U, plus 1% point, rounded to the nearest $50. Delayed until 2022.
  • PCORI Fee or CERF (Comparative Effective Research Fee): Increases by rate of medical inflation per average covered life (fee increases each year until it is phased out in 2019). Fee to be determined. Fees incurred in 2018 and paid 7/31/2019.
  • Insurance Industry Fee: Fee on medical, dental and vision to help fund federal and state Exchanges. The fee begins at ~2.3% of premium and increases to 4%. The actual fee is based on each carrier’s market share per year and may vary by insurance carrier. Fee to be determined. Moratorium during 2019 calendar year.
  • Medicare Part D “Donut Hole” is Closed: In 2020, the “Donut Hole” coverage gap in Medicare prescription benefit is fully phased out. Seniors continue to pay the standard 25% of their drug costs until they reach the threshold for Medicare catastrophic coverage.
  • Cadillac Plan Tax Imposes a 40% tax on the value of high-cost employer sponsored coverage. Threshold amounts indexed to CPI-U, rounded to the nearest $50. For each employee (other than specific individuals¹), the age and gender adjusted excess premium amount is equal to the excess, if any, of (1) the premium cost of standard FEHBP coverage for the type of coverage provided to the individual if priced for the age and gender characteristics of all employees of the individual’s employer, over (2) the premium cost, determined under procedures proscribed by IRS, for that coverage if priced for the age and gender characteristics of the national workforce.