Date: Dec 04, 2014
Magazine:
December 2014: Immigration Effort Top Story of 2014

Dear Jon,

We have a health benefit plan and are concerned about 2015 and what’s coming down the pipe.  What should we be aware of moving into the New Year?

Vexed in Ventura

 

Dear Vexed,

It might be helpful to look back before we look forward.  Below is an overview of what’s been enacted and what’s coming in 2015 and beyond.  Please note, the changes described are effective for plan years beginning on or after the date noted.

 

2010

Description

Effective Date

Patient Protection and Affordable Care Act of 2010

March 23, 2010

Health Care and Education Reconciliation Act of 2010

March 30, 2010

Prohibition on pre-existing conditions exclusions for certain enrollees.

Coverage cannot be denied for children under 19 due to a preexisting condition.

Prohibition on lifetime dollar limits

Lifetime dollar limits on coverage for essential health benefits prohibited.

Limitations on annual dollar limits

Annual limits on coverage for essential health benefits restricted unless temporary waiver obtained.

Rescissions Prohibited

Technical errors on applications no longer grounds for rescinding coverage (retroactive termination for fraud or misrepresentation stilled allowed – not deemed a rescission).

Mandated offer of coverage of dependents to age 26 for non-grandfathered plans

Offer of coverage mandated for dependents to age 26 even where dependent’s married, financially independent (temporary exception for grandfathered plans until 2014).

Expanded appeals process for non-grandfathered plans

New external independent appeals process for non-grandfathered plans (currently limited to claims denied based on medical judgment).

Coverage of Preventive Benefits for non-grandfathered plans.

Non-grandfathered plans required to provide preventive coverage without cost sharing (no deductibles, copays, or out of pocket).

Small Business Tax Credit

Tax credit for small businesses with 25 or fewer employees with average salary $50,000 or less where employer pays for at least 50% of coverage.  Sliding scale tax credit: up to 35% in first phase (more in later phase).

Medicaid Expansion Option

Creates an option for states to opt-in to expanded Medicaid.

 

2011

Medical Loss Ratio requirements for insurance companies

Insurance companies (not self-funded group health benefit plans) required to spend at least 85% of each premium dollar received from large employer plans on health care services and health care quality improvement  and 80% of each premium dollar received from small employer plans on health care services and health care quality improvement.

Nondiscrimination rules apply to fully-insured plans*

Nondiscrimination rules relating to fully-insured plans delayed indefinitely until regulations can be re-written and approved.

2012

Summaries of Benefits and Coverage

Uniform summary of benefits and coverage (SBC) must be provided to all applicants and enrollees.  The SBC uses standardized language to describe health benefits and a standard glossary to define terms common in the industry that define and describe coverage.

W-2 Cost of Coverage Reporting

 

Employers required to file 250 or more W-2 forms responsible for reporting total cost of coverage on W-2 forms.  Effective for 2012 W-2 distributed in early 2013.

New Women’s Preventive Services

Effective as plans renew on or after August 1, 2012.  A number of preventive services just for women including but not limited to: well-woman visits, domestic violence screening, and breast-feeding support, supplies, and counseling.

2013

Exchange Notification Requirements

Employers to provide employees with a uniform notice that explains health insurance exchanges the availability of coverage by October 2013 and thereafter within 14 days of hire. No penalty for failing to notify.

Flexible Spending Account Limits

Flexible Spending Account contributions limited to $2,500 and thereafter indexed.

Open Enrollment for Exchanges

Health Insurance Exchanges, digital marketplaces for small employers and individuals to shop for health insurance commence open enrollment October 2013 for January 1, 2014 effective dates.

2014

Individual Mandate

U.S. citizens and legal residents required to obtain minimum essential coverage order pay a penalty (or qualify for waiver or hardship exemption).

Health Insurance Exchanges

Health Insurance Exchanges open for business serving individuals and small businesses (under 50 full-time employees and equivalents)

Health Insurance Premium and Cost Sharing Subsidies

Premium credits and cost sharing subsidies available to individuals and families with incomes between 133% – 400% of federal poverty level.

Waiting Period Limits

Waiting periods for coverage for full-time employees limited to 90 days.

Prohibition on annual dollar limits on essential health benefits

The prior restrictions on annual limits replaced with a complete prohibition on dollar limitations on essential health benefits. 

Prohibition on pre-existing conditions exclusions for all enrollees.

Pre-existing conditions exclusions prohibited for all enrollees in group health benefit plans.

Community Rating Rules

 

Individual and small group non-grandfathered plans subject to guarantee issue and renewability and allow rating variation based upon 3 to 1 ratio.

Essential Health Benefits Package

 

Refers to comprehensive set of health benefit services, which covers at a minimum 60% of actuarial value of covered benefits with limits on cost sharing.  Small non-grandfathered plans and individual plans offered in health insurance exchange must meet this standard.

2014 continued

Temporary Reinsurance Program for Health Plans

Tax on health insurers and group health plans to offset costs and risk of health plans covering high risk persons in the individual market.

Health Insurer Tax

Tax on health insurance sector.

Medicaid Expanded

Expands Medicaid to all individuals not eligible for Medicare under the age of 65 with incomes up to 138% of the federal poverty level.

Prohibition on annual dollar limits on essential health benefits

U.S. citizens & legal residents required to obtain minimum essential coverage order pay a penalty (or qualify for waiver or hardship exemption).

Prohibition on pre-existing conditions exclusions for all enrollees.

Health Insurance Exchanges open for business serving individuals and small businesses (under 50 full-time employees and equivalents)

2015

Employer Shared Responsibility Tax (100 or more full-time employees & equivalents)

The pay or play mandate is effective upon employers with 100 or more full-time employees and equivalents.  An employer of this size is obligated to offer substantially all full-time employees and their dependents the opportunity to enroll in minimum essential coverage that is affordable and that provides minimum value at least once per year.

2016

Employer Shared Responsibility Tax (50 or more full-time employees & equivalents)

The pay or play mandate is effective upon employers with 50 or more full.

 

Minimum Essential Coverage Reporting

 

Internal Revenue Code Section 6055 and 6056 reporting requires entities that provide minimum essential coverage including but not limited to insurers, self.

2018

Cadillac Tax

Tax on insurers of employer-sponsored health plans with aggregate expenses that exceed $10,200 for individual coverage and $27,500 for family coverage.

 

 

 

Looking ahead to 2015, the primary issues are the impact of the employer shared responsibility tax, also known as the “Pay or Play” mandate, minimum essential coverage reporting and the Cadillac tax.

The Pay or Play mandate requires a large employer to offer qualifying coverage or potentially pay a tax.  The tax is triggered when a full-time employee goes to a health insurance exchange and qualifies for subsidized health benefits coverage.

Whether one of your full-time employees qualifies for subsidized coverage depends on his or her income and on whether or not you, as the large employer, have made a qualifying offer of coverage.  A full-time employee with a household income between 133% – 400% of the federal poverty line will qualify for subsidized health coverage at an exchange if:

1.  He is not offered coverage by his employer; or

2.  He is offered coverage, but the coverage is unaffordable or does not meet minimum value.

In 2015, only employers with 100 or more full-time employees and equivalents are subject to the mandate.  These employers can meet their obligation by offering qualifying coverage to 70% of their full-time employees and dependents.

In 2016, employers with 50 or more full-time employees and equivalents are subject to the mandate.  All employers with 50 or more full-time employees and equivalents can meet their obligation by offering qualifying coverage to 95% of their full-time employees and dependents.

In 2016, entities that provide minimum essential coverage, including but not limited to insurers, self-funded employers, employers participating in a multiple employer welfare arrangement and government health plans, will first be required to file an annual report with the IRS and furnish information to their employees about the coverage it offered during the prior year (in the first instance, during 2015).  This means that record-keeping and memorializing which employees are offered coverage in 2015 will be especially important to ensure that the filing and furnishing of the information can be made in early 2016.  This information must be furnished to employees by January 31, 2016, and the IRS by February 29, 2016, if filed by mail and March 31, 2016, if filed electronically.

Finally, in 2018, the Cadillac tax, or tax on high value health plans, goes into effect.  It is a 40% excise tax imposed on the value of health benefit plans exceeding specific dollar thresholds.  The estimated thresholds in 2018 are $10,200 for individual coverage and $27,500 for family coverage.  The tax would apply only to values in excess of the thresholds.  This tax applies to both fully-insured and self-insured health benefit plans.  In the case of fully-insured plans, the tax applies to the insurer, and in the case of the self-insured plan the tax applies to the employer.  Unfortunately, this tax is permanent unless and until it is repealed.

For more information about this article or if you have other questions about health care reform, contact our Health Care Reform team today at HealthCareReform@wga.com or 800-333-4WGA.  Write to Dear Jon at dearjon@wga.com.  For more information and resources about Health Care Reform, visit www.wgat.com/health-care-reform

WG Staff Contact

Jonathan Alexander
Vice President & PCMI Compliance
949-885-2330

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