8/8/2019 Healthcare Reform Employer Actions - The Buckner Company

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HR SOLUTIONSHuman resource solutions and support to build your business. HR Service, Inc., (801) 685-8400, www.HRServiceInc.com.

September 2010

Healthcare Reform 2011 Employer ActionsThe Patient Protection and Affordable Care Act andthe Health Care and Education Reconciliation Act of2010 lead to important health care delivery changesimpacting employers over the next several years. It iscrucial to understand how your business needs torespond. This article highlights some key provisionsthat affect employers and employer-sponsored health

plans, with emphasis on needed actions through 2011.

September 23rd & Plan RenewalThe following health plan changes are effective formedical plan renewal years beginning on or afterSeptember 23, 2010, for all group health insuranceplans and self-insured plans:

Health Plan Changes

Dependent Coverage Extension

Dependent coverage must allow such coverage tocontinue for an adult child up to age 26 (or to the endof the plan year during which the child turns age 26).

No Lifetime or Annual Limits

Plans may not impose a lifetime dollar limit onessential health benefits (e.g., emergency services,hospitalization, maternity and newborn care, etc.) andmust phase out any annual limits on such coverage by2014.

No Pre-Existing ExclusionsPlans may not impose pre-existing conditionexclusions for children under age 19 and mustcompletely eliminate such exclusions for participantsof any age by January 1, 2014.

Prohibited Rescissions

Plans may not rescind or cancel health coverage oncethe individual has become a covered participant.

Preventative Services First Dollar Coverage

Health plans are required to provide first dollarcoverage for preventative health services (unlessgrandfathered).

Emergency Services

Benefits will be the same for both participating and

non-participating emergency services (unlessgrandfathered).

Actions: Although insurance companies are takingthe initiative to implement coverage changes,employers need to be familiar with all changerequirements to make sure they are executed. TheSummary Plan Descriptions (SPDs) and WrapDocuments need to be updated. The plan summariesprovided by insurance companies do not meet ERISASPD requirements. Next, clearly communicate all

plan changes to employees before and during openenrollments.

Other 2011 ChangesNo Over-the-Counter Medications ReimbursementEffective January 1, 2011, there will be no over-the-counter medication reimbursement from healthsavings, flexible spending, or health reimbursementaccounts allowed.

Flexible Spending Accounts (FSAs)

Contributions to health FSAs will be capped at $2,500and over-the-counter medicines will only qualify forreimbursement with a doctors prescription.

Actions: Change plan documents and communicationmaterials for all flexible spending accounts, healthsavings accounts and health reimbursement plans.

Communicate changes to employees.

8/8/2019 Healthcare Reform Employer Actions - The Buckner Company

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Small Business Health Care Tax CreditEffective January 1, 2010, employers (with 25 orfewer full-time employees averaging $50,000 or less inwages) may be eligible for a tax credit of up to 35% ofthe employers premium costs of providing employeehealth coverage as long as the employer contribution isat least 50% of the total premium costs. Effective

January 1, 2014, the tax credit increases to 50%.

Actions: Employers with 25 or fewer full-timeemployees must decide whether or not to takeadvantage of the tax credit. If elected, the employermust meet the requirements and then submit thenecessary documents to receive the tax credit.

Reporting RequirementsEffective January 1, 2011, an employer must report theaggregate value of medical, dental, vision, andsupplemental insurance benefits coverage on the Form

W-2.

Actions: Employers must create tracking methodsthrough their payroll systems to gather employerhealthcare costs to be reported on Form W-2. Starttracking January 1, 2011 and be ready to provideemployees with this information on W-2 forms byJanuary 2012.

GrandfatheringOne important decision for employers who had

medical plans prior to March 23, 2010, is whether ornot they want to operate under special grandfatheringprovisions. Unless restricted by the insuranceprovider, employers can keep similar plan designs asmaintained prior to March 23, 2010, which allowsthem avoidance of many imposed health plan changes.For example, grandfathered health plans are notrequired to provide first-dollar coverage for preventivehealth services, and the requirement to cover adultchildren to age 26 does not apply to grandfatheredplans until 2014, if the adult child is eligible for other

employer-sponsored health plan coverage. They alsoavoid the provision that restricts health plans fromfavoring highly compensated employees and otherprovisions.

It appears that most insurance companies are notallowing smaller groups who have less than 50employees, and some as many as 100, to maintaingrandfathered plan status, making this an easy decisionfor them. Select Health of Utah recently announced

they would not be allowing groups with less than 50 tomaintain grandfathered plan status stating thatMaintaining this status is very restrictive and willresult in less choice for employers and individualswhen making changes to their plans. In a SLSHRMpresentation in August, Regence Blue Cross/BlueShield of Utah representative, R. Chet Loftis, statedthey likely would restrict grandfathering status for

smaller groups as well.

Actions: Employers should review their currentbenefit plan offerings to determine whether thebenefits of maintaining grandfathered health plancoverage outweighs the restrictions on plan design andcost-sharing changes imposed by these Interim FinalRules. Employers who decide to retain thegrandfathered status of the group health plan shouldcarefully document the plan or policy terms in effecton the grandfather date and include the model

grandfather statement in plan materials distributed toparticipants and beneficiaries. Employer sponsors ofinsured group health plans may find their insurancecarriers do not continue to offer certain products asgrandfathered health plan coverage because of theneed to separately track and administer grandfatheredpolicies and non-grandfathered policies, especiallygroups under 50 in size. Stay aware of applicableheath care reform changes, communicating allrevisions and actions to employees for a smoothtransition. Work closely with your insurance broker to

keep on top of all changes and for assistance withcommunications.

By Ken Spencer, SPHR, MHRMCEO and HR CoachHR Service, Inc., (801) 685-8400

References:

1.Health Care Reform Acts: Summary Sheet2.Bracing for Health Care Reform: Key Provisions for Employers,

Ceridian Corporation

3.Health Care Reform: Grandfathered Health Plan Regulations bySusan M. Nash, Amy M. Gordon, Jamie A. Weyeneth and

Elizabeth A. Savard, McDermott Will & Emery, LLP

Healthcare Reform Questions?

Contact your medical insurance brokerfor assistance with healthcare reformquestions.

Contact HR Service, Inc. for assistancewith any HR support, compliance,training or recruiting need at: (801) 685-

8400 or Ken@hrserviceinc.com