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Health Care Reform Your Timeline for Compliance
June 2010
© USI Insurance Services LLC 2010. All rights reserved.
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Disclosure Statement – Confidentiality
These materials are produced by Kibble & Prentice for the sole use of its clients, prospective clients, and their representatives. Certain information contained in these materials are considered proprietary information created by Kibble & Prentice and/or their licensed and appointed insurance carriers. Such information and any insurance designs furnished by Kibble & Prentice are considered “Confidential Material.” Such information shall not be used in any way, directly or indirectly, detrimental to Kibble & Prentice and clients and/or potential clients and any of their representatives will keep that information confidential.
Neither Kibble & Prentice nor any of its respective representatives or advisors has made or makes any representation or warranty, expressed or implied, as to the accuracy or completeness of the Confidential Material. Neither Kibble & Prentice nor their respective representatives or advisors shall have any liability resulting from the use of the Confidential Material or any errors or omission therein. These materials contain confidential information and provide general information for the use of our clients, potential clients, or that of our clients’ legal and tax advisors. Only a qualified attorney may prepare any document needed to implement any strategy explained in these materials, and the agent/broker or advisor is not in the business of practicing law, legally representing clients, or drafting legal documents.
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Today’s Agenda
Immediate Considerations On the Horizon Action Planning
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Key Components
Health Care Reform consists of two pieces of legislation:
Patient Protection and Affordable Care Act, enacted March 23, 2010 (Senate Bill)
Health Care and Education Affordability Reconciliation Act of 2010, enacted on March 30, 2010 (House Companion Legislation)
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Immediate Considerations
March 23, 2010 Grandfathered status established
¬ Coverage in place on March 23, 2010 is considered grandfathered
¬ Changes made to coverage after this date (except enrollment changes) may cause the plan to lose this status
Small business tax credit available (see www.irs.gov)
On and after March 30, 2010 Children up to age 27 in the taxable year receive tax favored
treatment of health benefits
June 21, 2010 Early retiree reinsurance program becomes available
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Immediate Considerations
For all plans effective the first plan year on or after September 23, 2010 No annual limitations on essential benefits, except
as allowed by HHS
No lifetime limitations on essential benefits
Cover adult children to age 26 (special exception applies for grandfathered plans)
No pre-existing condition exclusions on children under age 19
No rescission
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Immediate Considerations
For non-grandfathered plans effective the first plan year on or after September 23, 2010
Cover preventive care at 100%
105(h) nondiscrimination rules apply to insured plans
If plan requires PCP designation, allow enrollees to designate any in-network doctors (including OB/GYN and pediatrician)
Emergency services covered as in-network and no required preauthorization
New appeals process for insured plans
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Immediate ConsiderationsAs of January 1, 2011 No OTC drugs or medicines through a health FSA,
HRA or HSA without a prescription¬ Supplies, equipment and diagnostic devices appear
permissible (Rev. Rul. 2003-58)¬ Insulin still permissible
W-2 reporting of health benefits for taxable year ¬ (W-2 issued in 2012)
CLASS Act ¬ Employer may (but is not required to) allow employees to
make payroll contributions to the program
20% penalty on non-medical HSA distributions
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On the Horizon
2012 New benefits summary provided to enrollees HHS reporting
2013 $2,500 cap on the health FSA Increased Medicare tax on high-income earners
¬ 2.35% on wages; 3.8% on unearned income
New health plan fees for Outcomes Research Fund Employer notice on the existence of the Exchange
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On the Horizon
2014 State-based Exchanges operational and tax subsidies
available to lower income individuals Individual mandate and large employer penalties (50 or
more employees) are in effect $3,000 per FTE receiving government assistance; capped at
$2,000 multiplied by the number of FTEs in excess of 30
Free Choice Vouchers Automatic enrollment for large employers (200+) Wellness program rewards expanded (30%) IRS and participant coverage notification
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On the Horizon
2014 Benefit Design Reforms – All Plans
¬ No pre-existing condition exclusions
¬ Plan cannot impose more than a 90-day waiting period
¬ No annual benefit limitations
¬ Eligibility for children up to age 26
Benefit Design Reforms – Non-grandfathered Plans¬ Limited out-of-pocket costs
¬ Deductible limitations on small groups
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On the Horizon
2017 States may allow large employers (over 100
employees) to purchase coverage through the Exchange
2018 40% excise tax on high cost plans
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Action Planning
Immediate Await further guidance
Review plans to see whether you benefit from early retiree reinsurance program or small business health care tax credit
Review tax treatment of children covered by the plan – update documents accordingly (have until December 31, 2010 to amend cafeteria plan)
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Action Planning
First Plan Year following September 23, 2010
Ensure plans meet new reform requirements
Weigh value of “grandfathered status” against proposed plan design changes
Communicate OTC changes effective January 1, 2011
Ensure capabilities for W-2 reporting
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Action Planning
On the Horizon Prepare employees for changes to the health FSA
Begin thinking about your workforce, current benefit offerings and the employer penalties
Look at plans to determine exposure to 40% excise tax
Think about new compliance obligations and current resources – plan for more work within HR and Benefit teams
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Thank you!
ALICIA SCALZO WILMOTH, JD
Kibble & Prentice, a USI Company
p. 206.441.6300
www.kpcom.com
