BHCG Monitor: Focus on Health Care Benefits
 
 

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BHCG Monitor: Health Care Reform

 

Health Care Reform — Notable News

Health care reform with all its nuances and implications is an issue that remains front and center on our employer members’ radar screens. This column is a regular feature of the BHCG Monitor. We will be keeping you up to date on Affordable Care Act (ACA) developments relevant to employers and also providing information that we hope will be helpful you to you as you continue to develop your health care reform compliance strategies.

‘Pay or play’ provision reporting delayed

In a surprise announcement, and one that has been generally applauded by employers, the Obama administration has delayed implementation of the reporting related to the health coverage mandate of the Affordable Care Act (ACA) by one year – until January 1, 2015. The delay gives employers another year to prepare for the ‘pay-or-play’ mandate that requires employers with at least 50 full-time-equivalent employees to offer affordable health coverage to those who work at least 30 hours a week or face penalties. Employers with fewer than 50 employees remain exempt from the coverage penalties. The Administration said the delay will allow federal agencies to work with employers to simplify reporting requirements necessary to implement this provision of the ACA. (This delay in the reporting requirement related to the health coverage mandate, has NO bearing on the implementation of the individual mandate, that is scheduled to go into effect on January 1, 2014.)

Had there been no reporting delay, the $2,000 penalty for not offering coverage and the $3,000 penalty for not offering “affordable” or "minimum value" coverage would have been able to be enforced starting in 2014. Specifically, employers that averaged 50 or more workers (including full-time equivalents) during the preceding calendar year would have to either offer coverage to 95 percent of its full-time workers (30 hours per week) or pay a penalty equaling $2,000 per full-time worker. This significant penalty would have been assessed on all full-time workers even if most workers (but less than 95 percent) receive an offer of coverage. Further, the employer mandate provision would have imposed a $3,000 per worker penalty if a low-income employee decided to seek coverage through the insurance exchange after being offered coverage that did meet actuarial value or affordability minimums.

While the delayed reporting requirement in essence has delayed the ‘pay or play’ mandate, a variety of key provisions are scheduled to go into effect on January 1, 2014. Absent any future adjustments from the Administration, plans are still obligated to comply with a number of specific changes. These include:

  • Waiting periods cannot exceed 90 days
  • Caps on annual out-of-pocket maximums and elimination of lifetime and annual limits
  • Revised Summary of Benefits and Coverage notices and a required notice of availability of exchanges (Health Insurance Marketplace)
  • Excise taxes and fees, such as the ‘PCORI’ fee (to fund comparative clinical effectiveness research) and the reinsurance program fee

Even though pay-or-play mandate enforcement is delayed, employers should continue to take the necessary steps to make sure their plans are in compliance. This delay only affects who employers might have to offer coverage to, not the specifics of the coverage that will be offered. Employers should take 2014 to implement “employment structures” to make sure their part-time and full-time employees are clearly defined. Employers have been given some breathing room on implementation of the ‘pay or play’ mandate, but in all likelihood it will be implemented beginning in 2015.

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BHCG Monitor: Focus on Health Care Benefits - April 2012