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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
Western Growers members care deeply for the food they grow, the land they sustain, the people they employ, and the community in which they live.