Health Care Reform: Employer’s To Do List for 2013
by Rich Glass
Some areas of law are so pervasive that all attorneys should have a minimum level of knowledge. Examples include the First Amendment and Miranda. The latest entry on that short list arrived in 2010: the health care reform law known as the Affordable Care Act (ACA).
This year, the ACA is building to a crescendo that will hit a high note on January 1, 2014. It will affect employers of every size and every man, woman and child. During 2013, you may hear this question often: “What should I be doing about health care reform right now?” Here are some things to include in your answer:
· Make sure you are doing this. Recent changes should already be in place: the additional 0.9 percent Medicare tax for wages over $200,000, Health FSA salary reduction contribution limit of $2,500 and W-2 health care coverage reporting (if the employer had 250 or more W-2s in the prior tax year). Major medical plans should also be providing a Summary of Benefits & Coverage, the ACA’s equivalent of the nutrition facts label.
· Understand the exchange. The enrollment period for the affordable insurance exchange (AIE) starts on October 1, 2013. AIE coverage is available for individuals and small businesses with 100 or fewer employees. Many states (like Texas) have opted for the federal government to run the AIE, now known as the Health Insurance Marketplace. Employers must send an informational notice in late 2013 to all current employees and new hires.
· Count to 50. Employers must determine if they have at least 50 full-time equivalents. If they do, they are subject to the play or pay employer penalty tax, starting in 2014. A full-time employee is any employee who works on average at least 30 hours per week.
· Decide to play or pay. An employer subject to the penalty tax must offer essential health benefit coverage to its full-time employees or face the tax penalty. This coverage must provide minimum value and be reasonably affordable (typically, no more than 9.5 percent of wages).
· Know who is full-time. Extensive regulations have been issued for determining full-time status for employees with variable work schedules. Employers have choices to make regarding measurement, administrative and stability periods.
· Ensure some things end. Next year will signal the death of preexisting condition exclusions for medical plans, regardless of age. Also, lifetime and annual limits will be prohibited on essential health benefits.
· Check those deductibles. Starting in 2014, individual and small group market health plans can impose deductibles that are no higher than $2,000 (single), $4,000 (family). For future years, the deductible limits will be indexed to inflation.
· Get well. Wellness program incentives will be enhanced in 2014, increasing from 20 to 30 percent of coverage cost. The incentive can be up to 50 percent for tobacco cessation incentives.
· Do not wait forever. For plan years starting in 2014, group health plan waiting periods cannot exceed 90 days. Special rules exist for part-time and variable hour employees.
· Prepare for the fees. The ACA has a high price tag, and 2014 will see employers and insurance carriers starting to pay the bill. Carriers must pay $1 per participant to pay for Patient-Centered Outcomes Research (PCOR). PCOR fees are due from employers if they have an applicable self-insured medical plan. PCOR fees will increase to $2 the next year and then will be indexed for inflation until plan years ending before October 2019. Reinsurance fees will be due from carriers for 2014-2016, estimated to be $63 per covered life per year. Self-insured medical plans will be responsible for the fee. Carriers will also be subject to an annual fee for covering U.S. health risks. The amount of the fee is not known as of this writing, but will be based on market share. Some $8 billion is expected to be raised in 2014 alone. To the extent that a carrier pays a fee, the cost likely will flow downstream to employers and individuals.
· Keep checking. A good resource for any lawyer is www.healthcare.gov. Its search engine works well, and you can find the law and all regulations.
The above list captures the highlights and is not a comprehensive summary. Keep in mind that ACA’s official length is 974 pages (http://housedocs.house.gov/energycommerce/ppacacon.pdf). All of the ACA provisions that occur in 2014 will require careful planning in 2013.
Rich Glass is Chief Compliance Officer at Infinisource, Inc., a benefits and payroll TPA. He can be reached at firstname.lastname@example.org.