The New Year brings new requirements under Health Care Reform. The following checklist highlights key changes that may affect employers and insured group health plans this year.
Please Note: This list is for general reference purposes only and is not all-inclusive. The information is subject to change based on new requirements or amendments to the law. If you have questions regarding your responsibilities, please contact a knowledgeable employment law attorney, benefits advisor, or your carrier.
1. Evaluate Grandfathered or Non-Grandfathered Status of Plan
A grandfathered plan is one that was in effect on March 23, 2010.
If a plan loses its grandfathered status, it may no longer be exempt from certain requirements under Health Care Reform.
- Determine whether any changes to the plan that reduce benefits or increase costs to employees and dependents enrolled in coverage result in a loss of grandfathered status.
- To maintain grandfathered status, provide a statement indicating the plan believes it is a grandfathered health plan, along with contact information for questions and complaints, whenever a summary of benefits under the plan is provided to participants and beneficiaries.
2. Review Plan Documents for Required Changes to Plan Benefits
Certain requirements apply on a plan year basis, meaning the changes take effect when a group health plan begins a new plan year. As a result, compliance deadlines may vary.
- Annual limits on “essential health benefits” are being phased out according to the limits set by law (no lower than $2 million for plan years starting between September 23, 2012 and January 1, 2014).
- Note: Stand-alone HRAs in effect prior to September 23, 2010, which are automatically exempt from the rules concerning annual dollar limits until January 2014, must distribute an annual notice to participants and subscribers stating that the plan has restrictive coverage and includes low annual limits.
- For plan years beginning on or after January 1, 2013, salary reduction contributions to health FSAs are limited to $2,500 annually, indexed for inflation for subsequent plan years. Written cafeteria plans must be amended by December 31, 2014 to reflect this change.
- Except for grandfathered plans, coverage of additional women’s preventive services such as well-woman visits, breastfeeding support, domestic violence screening, and contraception is provided without cost-sharing requirements, starting with plan years beginning on or after August 1, 2012.
3. Provide Required Notices to Employees and Dependents
Please contact your carrier or employment law attorney if you have questions about these notices.
- Summary of Benefits and Coverage (SBC). Starting with plan years and open enrollment periods beginning on or after September 23, 2012, provide participants and beneficiaries a summary of benefits and coverage at specified times during the enrollment process and upon request.
- Note: Insured group health plans may satisfy this requirement if the issuer provides a timely and complete SBC to the participant or beneficiary.
- Notice of Plan Changes. Additionally, if any material modification is made in any of the terms of the plan or coverage that would affect the content of the SBC, that is not reflected in the most recently provided SBC, and that occurs other than in connection with coverage renewal or reissuance, the plan or issuer must provide notice to enrollees not later than 60 days prior to the effective date of the change.
- Availability of Health Insurance Exchanges. Beginning March 1, 2013, provide each new employee at the time of hiring (and each current employee no later than March 1) a written notice containing certain information about a Health Insurance Exchange.
- Note: The DOL is expected to issue a model notice that employers may use to satisfy this requirement along with regulations, which may delay the March 1 compliance deadline.
4. Report Employer-Provided Health Plan Coverage on Forms W-2
This requirement does not apply to employers that were required to file fewer than 250 Forms W-2 for the preceding calendar year, unless and until the IRS publishes further guidance giving at least 6 months’ advance notice of any changes.
- Beginning with calendar year 2012 Forms W-2 (required to be furnished to employees in January 2013), employers that provide a group health plan to their employees are generally required to report the cost of the coverage provided to each employee annually.
5. Other Action Items for 2013
The following additional items may be of significance for certain employers and group health plans.
- Additional Medicare Tax for High Earners. Employers are required to withhold Additional Medicare Tax (at a rate of 0.9%) on wages or compensation paid to an employee in excess of $200,000 in a calendar year, for taxable years beginning after December 31, 2012.
- Medical Loss Ratio (MLR) Rebates. Employers who receive rebates, as a result of insurance companies not meeting specific standards related to how premium dollars are spent, may be responsible for distributing the rebates to eligible plan enrollees. Rebates are due to employer-policyholders by August 1 each year.
- Simple Cafeteria Plans. If eligible, consider whether your company could benefit from establishing a simple cafeteria plan, which may be treated as meeting certain IRS nondiscrimination requirements.
- Small Business Health Care Tax Credit. Determine if your company qualifies for the small business health care tax credit. For tax years 2010-2013, the maximum credit is 35% for small business employers.