Reforms currently effective. Caresani and McHugh first reviewed the reforms that were phased in during 2011. These reforms range from the prohibition on annual and lifetime limits on “essential health benefits” to the simple cafeteria plan alternative for small employers.
McHugh also noted the automatic enrollment provision for employers with 200 or more full-time employees was supposed to take effect, but is on hold until regulations are issued. “We don’t know when it will become applicable,” he said.
Regarding non-grandfathered plans, the nondiscrimination requirements for insured plans are also postponed indefinitely “amid regulatory confusion,” according to McHugh.
Other reforms with respect to non-grandfathered plans include:
- providing preventive care with no cost sharing for specified items,
- prohibiting prior authorization or increased cost-sharing for emergency services, whether in-network or out-of-network,
- permitting enrollees to select a primary care provider from any available participating care provider, and
- prohibiting authorization or referral for OB/GYN care by a specialist.
Reforms in 2012. Caresani and McHugh next explained the reforms that are taking place this year. Most notable is the Form W-2 information reporting requirement on the value of employer-sponsored health coverage. This reporting is optional in 2011 and required for 2012, Caresani explained. Small employers (fewer than 250 Forms W-2 in 2011) are exempt for 2012, and reporting is optional for numerous types of plans. If a Form W-2 is not otherwise required, such as for retirees, then this reporting requirement doesn’t apply, she said.
Caresani wondered about the purpose of this requirement and advised plans to start on it sooner rather than later, especially focusing on who is going to collect this information. “This is a tough requirement from a systems standpoint,” she said.
Providing a Summary of Benefits and Coverage is another provision that was supposed to take effect in 2012. Employers were supposed to provide this notice by March 23, 2012, but this deadline has been extended, and we are waiting on guidance, McHugh said. Such guidance could be issued in the next few months, he added.
Other provisions taking effect in 2012 include the quality reporting requirement (from which grandfathered plans are exempt), and the medical loss ratio rebates. Although the rebate provisions apply to insurance plans only, when the first rebates, if any, come out this summer, plan sponsors will be faced with various decisions about such rebates. Caresani said plan sponsors might have to determine whether these rebates are plan assets or must be shared with participants. Further, if a plan receives a rebate, that plan might want to question why it did and may want to check the plan’s coverage.
Reforms in 2013. Moving onto a discussion about 2013, McHugh described it as a “respite year” for health care reform. One provision that will take effect is the notification of the availability of state health exchanges in 2014. The standards on this notice have not been issued yet, however. There could be some initial guidance on the notice this year, McHugh said.
Another change in 2013 is that FSA benefits will be capped at $2,500 annually. Although there were some rumblings in the legislature about getting this provision changed, there’s not a challenge to it right now. McHugh said to keep an eye on the issue and, in the meantime, realize this provision requires plan administration changes.
Also in 2013, the deduction for expenses allocable to the Medicare Part D prescription drug subsidy expires. Companies will have to decide whether to keep or terminate their retiree drug plans. “Many companies are likely to drop these plans,” McHugh predicted.
Reforms in 2014. Unlike 2013, 2014 is a “big year” for health care reform, McHugh said. In 2014, the state health exchanges will be established. In addition, the nondeductible excise tax for employers that don’t offer health coverage will kick in. This tax is $2,000 per affected employee. The nondeductible monthly excise tax for unaffordable coverage also will take effect. This is the lesser of 1/12 of $3,000 times the number of employees receiving a premium tax credit or cost share reduction, or 1/12 of $2,000 times the number of full-time employees, he explained.
For non-grandfathered plans, eligibility discrimination based on health status will be prohibited, and cost-sharing cannot exceed certain limits. In addition, discrimination as to participation or coverage against health care providers is prohibited, except that reimbursement rates may vary based on quality.
Also in 2014, clinical trial coverage kicks in. McHugh explains that this provision applies to life-threatening diseases and applies only if your plan already covers that disease. It does not require plans to add a certain type of coverage. Note that grandfathered plans are exempt from this provision.
In addition, 2014 will bring requirements such as limitations on waiting periods, increases in wellness program incentive caps, and premium rating requirements for insured plans.
Some additional reporting requirements will be effective in 2014, too. Employers providing health plan coverage must provide information to the IRS on prescribed forms. In addition, employers must report to the IRS if any employee is required to pay more than a set percentage of wages. The range of information that will be required is unknown, McHugh said.
Reforms beyond 2014. Caresani noted there are a few reforms that take place beyond 2014. In 2017, the health exchanges may be open to large employers. In addition, in 2018 the “Cadillac plan” tax takes effect. There’s uncertainty as to what these plans are, Caresani said. In addition, this provision is controversial and she wonders whether it will stay in place. She also pointed out that a lot of collectively bargained plans could be affected by this provision.
Short-term preparation. There are some steps employers can take in the short term to prepare for these reforms, McHugh said. He suggested making changes to health care plans only after careful consideration of grandfather plan status. Also, consider and adopt necessary changes to health care plan documents to conform to the changes. Keep in mind that cafeteria plan documents might need changes as well and should not conflict with the health plan documents, McHugh advised.
Also, it’s important to start reviewing the new reporting and disclosure requirements. Figure out what needs to be done and when to do it, he said.
Also in the short term, train your internal staff regarding the new requirements and update administrative procedures (including payroll systems) to ensure compliance. Further, develop an employee communication strategy concerning health plan changes, McHugh advised.
Long-term preparation. Caresani concluded with some steps to take in the long term to prepare for the reforms. She said to identify future changes that must be made to health care plans to comply with ACA’s phased-in requirements, and analyze whether to retain grandfathered status.
Also, consider the cost and competitive implications of eliminating your health care program altogether. After 2014, plans should begin modeling plan costs, she said.
Finally, monitor future legislative, judicial and regulatory developments. (You can do this by checking back often to Health Reform Talk!)
SOURCE: “Health Care Reform Developments in 2012 and Beyond: Don’t Wait!,” IFEBP webcast, January 23, 2012.