Health Care Reform Employer Checklist Hon. James Zander, CLU, RHU, LUTCF James Zander & Associates

Health Care Reform Employer Checklist 2012 Items to monitor Items that may require action Employer Checklist 2012 Women’s Preventive Health Services – for plan years beginning on or after August 1, 2012 Non-grandfathered plans are required to cover a variety of preventive care services for women with no cost sharing. The inclusion of contraceptives in the list of covered preventive services has been controversial, and on February 10, 2012, Health and Human Services announced a proposal to require insurers to provide the coverage while accommodating the religious objections of non-exempted, non-profit organizations.. 1 Employers with non-grandfathered plans will need to add these preventive care benefits to their coverage for plan years beginning on or after August 1, 2012. 2 Medical Loss Ratio (MLR) reporting begins, with first rebates issued August 1, 2012 For fully insured business only, insurers must provide rebates to enrollees if their MLR (the percent of premium spent on claims) for policies issued in a state less than 85% in the large group market or 80% in the small group and individual markets. Rebates will be based on the MLR in the state where the policy was issued. 2 1 2 There is no direct impact to self-insured employers.

Health Care Reform Employer Checklist 2012 1 Items to monitor 2 Items that may require action Employer Checklist 2012 Summary of Benefits and Coverage (SBC) – effective for open enrollment periods beginning on or after September 23, 2012 For open enrollment periods beginning on or after September 23, 2012, insurers and self-insured employers must provide a standardized SBC to each person eligible to enroll in coverage. For plan years beginning on or after September 23, 2012, an SBC must be provided to newly eligible and special enrollees. The SBC must follow the regulatory templates, specifically: Four (4) double-sided page format in 12-point font Coverage examples to illustrate the cost of treatment for 1) having a baby, and 2) managing Type 2 diabetes A glossary of medical and insurance terms Customer service phone number and website where individuals can get additional information.   The penalty for “willful” non-compliance of the SBC regulations is $1,000 per enrollee. 1 2 2 Employers with open enrollment periods beginning on or after September 23,2012 must provide the SBC to participants enrolling or reenrolling at open enrollment (including late enrollees) – no later than the first day of the open enrollment period. For participants enrolling other than through open enrollment (including newly eligible and special enrollees) – employers must provide the SBC starting on the first day of the plan year beginning on/after September 23, 2012.

Health Care Reform Employer Checklist 2012 1 Items to monitor 2 Items that may require action Employer Checklist 2012 Quality of care reporting rules effective October 1, 2012 Health and Human Services is expected to develop reporting requirements with respect to plan or coverage benefits and health care professional reimbursement structures. These requirements are scheduled to take effect October 1, 2012. 1 Because no guidance has been given, we are still unsure what, if any, actions will be required of employers. 2 Patient-centered outcomes research fee begins October 2, 2012 The revenues from this fee will fund research to determine the effectiveness of various forms of medical treatment.   The initial annual fee of $1.00 per covered life is for plan years that began on or after October 2, 2011. This fee increases to $2.00 in 2013, then to an amount indexed to national health expenditures until 2019, when it phases out. 2 1

Health Care Reform Employer Checklist 2012 Items to monitor Items that may require action Employer Checklist 2012 Patient-centered outcomes research fee begins October 2, 2012, cont’d. Because no guidance has been given, we are unsure exactly when fees will be required of self-insured employers. 1 Reducing Paperwork and Administrative cost is expected in 2012 Health plans must adopt rules for the secure, confidential and electronic sending of health information. Standard documents could reduce paperwork and administrative duties, lower costs and decrease medical errors. Grandfathered plans are not required to participate. 2 Because no guidance has been given, we are unsure what, if any actions will be required of employers. 2

Health Care Reform Employer Checklist 2013 Items to monitor Items that may require action Employer Checklist 2013 Flexible Spending Account contribution limits effective January 1, 2013 Health care reform limits an individual’s annual maximum election to $2,500 for flexible spending accounts (amount may be adjusted for inflation beginning in 2014.) If a plan year ends sometime after December 31, 2012, all 2023 contributions count toward the new cap. 1 Additional Medicare taxes for higher income workers effective January 1, 2013 A new 0.9% Medicare tax will apply to earned income greater than $200,000/individual or $250,000/couple. A new 3.8% Medicare payroll tax will apply to unearned income (investment income) for those whose adjusted gross income is more than $200,000/individual or $250,000/couple. 2 Employers will need to begin withholding the additional Medicare taxes on earned income in 2013.

Health Care Reform Employer Checklist 2013 2014 Items to monitor Items that may require action Employer Checklist 2013 Employee exchange notice effective mid-year, 2013 Employers must provide all new hires and current employees a written notice about the health benefit exchange and some of the consequences is an employee decides to purchase a qualified health plan through the exchange in lieu of the employer-sponsored coverage. 1 Because no guidance has been given, we are unsure exactly when the notice for exchanges will be required. 2014 Essential Health Benefits effective January 1, 2014 2 Individual and small group health plans are required to cover essential health benefits beginning in 2014. A recent bulletin indicates that essential health benefits will be defined by each state. Large group plans will be affected since anything defined as an “essential health benefit” cannot be subject to annual or lifetime dollar limits.

Health Care Reform Employer Checklist 2014 1 Items to monitor 2 Items that may require action Employer Checklist 2014 Employer Mandate effective January 1, 2014 Employers with 50 or more full time employees must offer medical coverage to their full-time employees or pay penalties.   If no coverage is offered to full-time employees AND any full-time employee receives premium assistance from the federal government, the penalty is $2,000 annually for each full-time employee minus 30. Medical coverage must provide minimum value and be affordable. Coverage provides minimum value if it pays at least 60% of the cost of covered services. Coverage is considered affordable if the premium contribution for single coverage does not exceed 9.5% of an employee’s W-2 wages. If coverage does not meet these requirements AND any full-time employee receives premium assistance from the federal government, the penalty is the lesser of $3,000 for each employee receiving premium assistance or $2,000 per employee for each full-time employee minus 30. 1 2 2 Employers will pay penalties if they do not provide coverage or if their medical coverage does not meet required standards AND any full-time employee receives premium assistance.

Health Care Reform Employer Checklist 2014 Items to monitor Items that may require action Employer Checklist 2014 No Pre-existing Condition Limits effective January 1, 2014 No limits on coverage for pre-existing conditions will be allowed for anyone enrolled in a medical plan regardless of age. 1 Employers will need to remove all pre-existing condition limits. Essential Health Benefits effective January 1, 2014  Employers with more than 200 full-time employees that offer medical coverage are required to automatically enroll new full-time employees and to re-enroll current employees in a company medical plan.   Employees must be given the time and opportunity to opt out of this coverage and a waiting period of up to 90 days is allowed before coverage begins. FAQs issued by the DOL and IRS on February 9, 2012 stated that guidance will not be completed in time for the open enrollment requirement to take effect by 2014. Employers will not be required to comply with this requirement until final regulations are issued, which is expected to be in 2014.

Penalties for Employers Not Offering Affordable Coverage Under the Affordable Care Act Beginning in 2014 Does the employer have at least 50 full-time equivalent employees? If the employer has 25 or fewer employees and average wages up to $50,000, it may be eligible for a health insurance tax credit. Penalties do not apply to small employers. START No Yes Did at least one employee receive a premium tax credit or cost sharing subsidy in an Exchange? Does the employer offer coverage to its workers? The employer must pay a penalty for not offering coverage. The penalty is $2,000 annually times the number of full-time employees minus 30. The penalty is increased each year by the growth in insurance premiums. Yes No Yes Does the Insurance pay for at least 60% of covered health care expenses for a typical population? Employees can choose to buy coverage in an Exchange and receive a premium tax credit. No The employer must pay a penalty for not offering affordable coverage. The penalty is $3,00 annually for each full-time employee receiving a tax credit, up to a maximum of $2,000 times the number of full time employees minus 30. The penalty is increased each year by the growth in insurance premiums. Yes Do any employees have to pay more than 9.5% of family income for employer coverage? Those employees can choose to buy coverage in an Exchange and receive premium tax credit. Yes No There is no penalty payment required of the employer since it offers affordable coverage.

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