The new health care reform legislation, the Patient Protection and Affordable Care Act (PPACA), brings sweeping changes that will affect all employers’ group health plans. Under the PPACA, every U.S. citizen and legal resident will be required to have health insurance coverage, or pay a penalty. The law creates a series of incentives and penalties to encourage employers to provide health care benefits.
The following timeline outlines practical steps construction firms can take on behalf of their employees, now and in the future.
The following action items are currently effective:
- Contractors with 25 or fewer full-time employees should work with their finance department to evaluate whether the company is eligible for the temporary small employer tax credit; if so, apply for the credit.
- Contractors that offer retiree coverage and apply for the Medicare Part D subsidy should evaluate the current impact on financial statements under the Financial Accounting Standards Board rules, as the Medicare Part D subsidy will become taxable in 2013.
- Contractors that offer retiree coverage for retirees ages 55 to 65 who are not eligible for Medicare should apply for the retiree reinsurance program, obtain claims data from their insurance company or accounting firm, and consider appropriate plan design changes.
Action items beginning Jan. 1, 2011
Evaluate what plans the company will offer and determine whether any plans need to be restructured.
- Determine whether the company has any grandfathered plans. (See ABC Newsline article: Interim Final Rule Released on Grandfathered Health Care Plans.)
- Determine whether to convert any dental and vision coverage to “standalone” plans so they are exempt from the new rules on annual and lifetime limits.
- Determine whether any fully insured plans need to be restructured to comply with the nondiscrimination coverage rules, such as executive-only plans.
- Understand the Community Living Services and Support (CLASS) Act, which makes long-term insurance available to all Americans.*
- Decide if the company should offer new wellness programs, which may be eligible for small business grants.
Amend medical plan documents.
- Remove lifetime maximum limits for essential health benefits.*
- Revise annual limits for essential health benefits to reflect U.S. Department of Health and Human Services (HHS) standards.*
- Remove pre-existing condition limits for children under age 19.*
- Limit right to rescind coverage only to fraud or intentional misrepresentation of a material fact.*
- Expand dependent eligibility to cover adult children up to age 26 (applicable to grandfathered plans only if the dependents are not eligible for coverage under another employment-based plan).*
- Remove cost sharing and implement first-dollar coverage for preventive care (deductibles, co-pays and co-insurance cannot apply).*
- Allow designation of any participating primary care provider.
- Remove restrictions on emergency care.
- Update internal and external appeals procedures.
- Make any additional design changes to offset some of the anticipated increases in costs due to limits on annual and lifetime maximums, removal of pre-existing conditions, etc.
Amend medical flexible spending account (FSA) plan documents.
- Eliminate reimbursement for over-the-counter drugs.*
- Small employers should consider establishing a “simple” cafeteria plan.
Provide notice of changes to participants (by Nov. 11).
- Give at least 60 days advance notice of changes (summary of material modifications or new summary plan descriptions).*
Negotiate insurance costs or stop-loss coverage, as applicable.
- Removal of annual, lifetime and pre-existing condition limits, cost sharing, the addition of other restrictions, and the expansion of dependent eligibility could create more expense to employers in terms of premiums for fully insured plans and stop loss.
Update contracts with third-party adminstrators/claims administrators.
- Comply with new internal and external claims processes.*
- Determine who will handle transparency disclosures.
- Determine who will prepare HHS reporting on medical loss ratios.
Implement auto-enrollment (depending on effective date).
Work with payroll to implement changes (e.g., a “simple” employer cafeteria plan, voluntary CLASS Act plan or W-2 reporting of employer-provided health coverage).*
Provide required notices to HHS of medical loss ratios and compliance with transparency provisions.*
Apply for grants available for small employer wellness program.
Action items beginning Jan. 1, 2012
Amend medical plan documents and coordinate with Medicare.
Provide new required (uniform) plan summaries.
Update contracts with third-party administrators/claims administrators.
- Put systems in place to enable quality of care reports to HHS.
Action items beginning Jan. 1, 2013
Amend medical FSA plan documents and impose caps on contributions.*
Work with payroll to implement changes, including medical FSA caps and increased Medicare taxes on earned income.*
Work with the company’s finance department on taxation of Medicare Part D subsidy and payment of per-participant fee (premium tax).
Provide required notices by March 1 to employees regarding availability of insurance exchanges.
Action items beginning Jan. 1, 2014
Evaluate what plans the company will offer.
- Small employers have access to state insurance exchanges.
- Large employers are subject to play or pay penalties, opt-out penalties and “free choice” vouchers.*
- Wellness plans have to meet certain standards, so existing wellness programs may need modification.
Amend medical plan documents.
- Grandfathered plans must expand dependent eligibility for adult children, even if eligible for other employer-provided coverage.
- Remove waiting periods exceeding 90 days.*
- Remove all annual limits on essential benefits.*
- Remove all pre-existing conditions (can no longer impose on individuals age 19 and older).
- Comply with mandated cost-sharing limits.
- Add coverage for clinical trials for cancer or life threatening diseases.
- Make any additional design changes to offset some of the anticipated increases in costs due to changes on annual limits, removal of pre-existing conditions and limits on cost sharing.
Negotiate insurance costs or stop-loss coverage, as applicable.
- Removal of annual and pre-existing condition limits, cost sharing and other restrictions, and expansion of dependent eligibility could create more expense to employers in terms of premiums for fully-insured plan and stop loss.
Complete report to the IRS on employer-provided coverage.*
Provide required notices regarding employer-provided coverage and wellness programs.*
Action items beginning Jan. 1, 2017
Large employers have access to state insurance exchanges.
Action items beginning Jan. 1, 2018
Work with the finance department and the contractor’s insurance company or actuarial firm to determine if it offers a “Cadillac” plan subject to penalty tax, or whether it can restructure its plans to minimize or avoid penalty.*
* Some health care plans that were in existence on March 23 are exempt from many (but not all) of the new law’s requirements. Provisions of the new law that do apply to grandfathered plans are identified.