On March 23, 2010, the Patient Protection and Affordable Care Act (PPACA) made significant changes impacting group health plans that employers offer their employees. Additionally, there are additional administrative requirements in the PPACA with which an employer will need to comply. It is imperative that employers have a detailed understanding of what changes are on the immediate horizon and what will be required in the future to adequately plan and account for the administrative and financial impact of these changes.
On June 28, 2012, the United States Supreme Court issued its ruling regarding the constitutionality of the Patient Protection and Affordable Care Act (PPACA) provision that requires individuals to purchase health insurance or pay a penalty beginning in 2014. By a vote of 5 to 4, the justices found that the individual mandate is constitutional as a tax on those without health insurance. As a result, the individual mandate and all provisions of PPACA dealing with employment-based group health plans and individually-purchased health insurance remain in effect. The Supreme Court’s opinion did find unconstitutional a part of the law that requires states to expand Medicaid eligibility or lose federal Medicaid funding, but that finding does not impact the remaining provisions of PPACA.
Based on this decision, employers and their group health plans need to continue to implement and comply with PPACA’s requirements, including published regulations and related guidance. Local Government Center HealthTrust continues to analyze the Supreme Court’s opinion and will monitor future guidance so as to keep our risk pool member groups apprised of the impact of the most recent developments.
In spring 2012, LGC HealthTrust provided group Benefit Administrators with the following slide presentation regarding PPACA, those requirements already in place through 2012 and expected compliance items for 2013 and later years.
The June 2012 issue of New Hampshire Town and City magazine includes a Healthcare Reform Overview. This article provides a brief narrative of current 2012 and future aspects of PPACA. [Note: After the magazine went to press, the IRS provided guidance on May 31 that the $2,500 limit for Flexible Spending Accounts does not apply for plan years that begin before 2013. Therefore, employer plans that started in 2012 are not subject to the limit until their renewal happens in 2013.]
Healthcare Reform Overview, New Hampshire Town and City
PPACA requires all employer group health plans to provide enrolled and otherwise eligible employees, under age 65 retirees, and COBRA beneficiaries with a uniform, easy-to-read “Summary of Benefits and Coverage” (SBC) describing the benefits and limitations of coverage under each plan option. This new SBC distribution requirement becomes effective the first day of the open enrollment period for a risk pool group’s January 2013 or July 2013 plan renewal. Please read the notice and the Frequently Asked Questions identified below to understand your obligations as PPACA contains significant penalties for failure to comply with these SBC requirements. The notice is specific to January 2013 risk pool groups. July renewal groups will receive a similar communication prior to their July 2013 open enrollment. The Frequently Asked Questions are available for both January and July risk pool groups.
Important Guidance from Federal Regulators
The following section draws from material published by the Internal Revenue Service, U.S. Department of Health and Human Services, U.S. Department of Labor, and other federal agencies. Please note that these regulations continue to evolve. Visit the government agency websites for the most up to date information.
|Document Title and Link||Topic|
|Revised Penalties for Large Group Employers under "Shared Responsibilities"||*NEW* 12/28/2012
IRS Questions and Answers on Employer Shared Responsibility Provisions Under the Affordable Care Act.
|Taxation of Adult Children to Age 26||IRS guidance for taxation of dependents.|
|IRS Summary of W-2 Requirements||Simplified IRS summary of W-2 requirements with examples of what to report, what does not have to be reported, and what is optional for reporting.|
|W-2 Reporting for 2012 Taxes||IRS guidance for W-2s that need to be issued by 1/31/2013 for employers which distributed 250 or more W-2s in the previous year.|
|Mandatory W-2 Reporting for 2012 Taxes||IRS Q&A format for issuance of W-2s.|
|FSA Maximums for 2013 and 2014||IRS FSA Maximum of $2,500 does not begin until the employer’s 2013 plan year. Also, other issues regarding Health FSA are contained in this notice.|
|Penalties for Large Group Employers under “Shared Responsibilities”||IRS rules require employers with 50 or more full-time employees to provide affordable health coverage for workers or else pay a penalty. Also known as “Play or Pay.” Penalties of $2,000 or $3,000 per individual.
(See “LGC Healthcare Reform Presentation” above for background.)
|Defining “Large Group Employers”||Employers with 50 or more full-time employees need to provide affordable health coverage for workers or pay a penalty.|
|IRS Mandatory Employer Reporting Requirements for Large Group Employers||The IRS mandates employer reporting requirements for employers with more than 50 Full-Time Equivalent (FTE) employees. Reports must be submitted to the IRS and employees.|
|FAQ Part I||This FAQ addresses the following: compliance, grandfathered health plans, appeals, coverage of dependent children, emergency services, and highly-compensated employees.|
|FAQ Part II||This FAQ addresses the following: grandfathered plans, dental and vision benefits, rescissions, preventive health services, and policy year for individual market insurance.|
|FAQ Part III||This FAQ addresses the following: exemptions for health plans with less than two current employees.|
|FAQ Part IV||This FAQ addresses the following: grandfathered plans and special treatments or therapies.|
|FAQ Part V||This FAQ addresses the following: preventive care benefits, automatic enrollment, 60-day notice for material plan modifications, dependent coverage, grandfathered health plans, mental health, and nondiscrimination due to health factors and wellness programs.|
|FAQ Part VI||This FAQ addresses the following: grandfathered health plans.|
|FAQ Part VII||This FAQ addresses the following: summary of benefits and coverage, mental health parity law.|
|FAQ Part VIII||This FAQ addresses the following: summary of benefits and coverage.|
|FAQ Part IX||This FAQ addresses the following: summary of benefits and coverage.|
|FAQ Part X||This FAQ addresses the following: Medicare Advantage plans.|
|FAQ Part XI||New - 1/24/2013
This FAQ addresses the following: Notice of coverage through the exchanges (delayed), HRAs, firearms and research fees.
|FAQ Mental Health Parity and Addiction Equity Act||This FAQ addresses the following: Mental Health Parity and Addiction Equity Act.|
IMPORTANT: The material on this page is for general informational purposes only. While we attempt to provide current, accurate and clearly expressed information, the information posted is provided "as is," and LGC makes no representations or warranties regarding its accuracy or completeness. It should not be construed as legal or tax advice or as a recommendation of any kind. Users should seek professional advice from their own attorneys and tax and benefit plan advisers with respect to their individual circumstances and needs.