Changes in Healthcare Reform
A Wischmeyer Benefit Partners Compliance Update
Big changes are on the horizon with the recent passage of health care reform (the Patient Protection and Affordable Care Act). The bill is packed with forthcoming changes and measures that will alter how the health insurance industry does business. If the Senate approves the Health Care and Education Affordability Reconciliation Act, additional changes in health care reform will be put in place. Highlighted below are some of the immediate requirements as well as the most impactful changes.
WBP is committed to keeping you informed and answering any questions you may have regarding the new legislation. Your dedicated account manager can help you understand the changes taking place and the requirements for employers as well as individuals. WBP will walk you through what is required of you, the timelines to implement these changes and your options. We will be analyzing your plans prior to your open enrollment to ensure that your benefits options are maximized in light of the current changes in healthcare. WBP will also help build long-term strategies and benefit plans that continue to fit your needs as well as the needs of your employees.
What takes place immediately…
Small Employer Subsidy – Businesses with 25 or less full time employees and average annual wages of less than $50,000 who provide qualified coverage are eligible for a premium tax credit. If the employer contributes at least 50% of the total billed premium, they can receive a tax credit of up to 50% of premiums for up to 2 years.
Medicare Subsidy Reporting – Immediate accounting requirements for employers who provide a Medicare Part D subsidy to retirees.
Temporary Reinsurance Program – (Within 90 days of enactment) Program will be created for employers providing retiree health coverage to employees over age 55.
What will be implemented in the future…
Changes to health plans created after September 2010:
· Group plans must comply with nondiscrimination rules for highly compensated individuals.
· Lifetime limits are prohibited for fully-insured, self-funded and individual plans.
· Dependents will be covered up to age 26 on all group and individual plans.
· Coverage cannot be revoked except in the case of fraud or intentional misrepresentation.
· All group and individual plans must cover specific preventive care services with no cost-sharing.
Changes to HSAs and FSAs in 2011:
· The penalty for using HSA funds for non-qualified medical expenses increases to 20% (currently set at 10%).
· Over-the-counter medicines will not be considered qualified medical expenses for reimbursement from FSAs, HRAs, HSAs or Archer MSAs.
· FSA contributions can no longer exceed $2,500 per year; the amount will be adjusted annually for inflation.
· Small Employers (under 100) can adopt a new “simple cafeteria plan.”
Other Employer Changes in 2011:
· Employers must include the aggregate cost of employer-sponsored health benefits starting with the 2011 W-2 reporting.
· Employers must enroll employees in a national public Long-Term Care program unless the employee chooses not to participate.
Changes for Employers in 2012:
· Group and individual plans and carriers report annually to the DHHS whether the plans meet DHHS criteria. This information must be provided annually to participants.
Taxes and Changes in 2013:
· Medicare payroll tax increases toan additional 0.9% for the self-employed and individuals earning more than $200,000 ($250,000 for married filing jointly).
· Medicare tax of 3.8% on certain unearned income for those individuals earning more than $200,000 ($250,000 for married filing jointly).
· Medical Expenses must total more than 10% of gross income (currently it is 7.5%) to be itemized on federal income tax reporting.
Changes for Individuals in 2014:
· Individuals must purchase health insurance; violators will face a tax penalty of up to $750 or 2% of their income.
· Medicaid expands to cover all individuals making less than 133% of the federal poverty level. Premium assistance is available for these individuals who have employer-sponsored plans.
· Premium assistance tax credits for individuals with a household income less than 400% of the federal poverty level to purchase individual coverage through the exchange.
· Employees will be eligible for the tax credit if:
Income is less than 4 times the federal poverty level, and
Actuarial value of the employer’s coverage is less than 60% OR employee is required to contribute more than 9.8% of the family’s income toward the premium.
· State must implement the Exchange for employers and individuals.
· Insurers must offer all plans on a guarantee issue basis (no pre-existing condition limitations) with no annual or lifetime limits.
Changes for Employers in 2014:
· Employers with 50 or more full time employees who do not offer coverage could be penalized if one or more employees becomes eligible for a premium assistance tax credit. The employer will be fined $750 per employee per year or $3,000 for each employee eligible for the tax credit.
· Employers must offer certain employees a cash voucher to purchase coverage through the exchange if the employee declines the employer’s coverage. This applies to employees that pay between 8% and 9.8% of their household income toward the health plan (when that income is less than 400% of the poverty level).
· Employers with 200 or more employees must auto-enroll new employees into any employer-sponsored health plan. Employees may opt out.
· Employers pay a $600 fine per full-time employee if they maintain more than a 60 day waiting period. Waiting periods cannot exceed 90 days.
· Plans for fully insured groups must meet certain standards for qualified coverage.
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