Health care reform

Are you ready?
By Michelle Valdez
December 4, 2010
COMMERCIAL : HUMAN RESOURCES

Editor's note: This article reflects health care reform provisions as of Oct. 27, 2010. It is meant to provide a general overview and should not be used as a comprehensive guide due to the evolving nature of the legislation. For more information on these provisions, contact your benefits broker or lawyer. Additional information is available at www.healthcare.gov.

As the new year approaches, so does the beginning of a new health plan or policy year for many glass companies. Several provisions of the Affordable Care Act, signed into law March 23, 2010, will go into effect as these policy years begin, and employers need to be prepared.

First, company executives should be ready to field questions from staff. Ensure that you have a human resources official educated on the matter, or enlist the help of your benefits broker to assist with communication to your staff. You might get questions like, "Are my benefits going to change with this new bill?" Or, "Will you have to make drastic changes to my plan design or costs?" At this point, the answer is no. The bill will allow for grandfathering of plans. All plans will have to coincide with the new provisions, which might affect premium rates in the future, but the bill will allow current plans to continue without interruption. As further clarification and legislation evolves, we could possibly see effects on health benefits. Until then, keep doing what you are doing.

Keep in mind that there are many more complex changes and rules that have yet to be addressed. These changes will be forthcoming as our legislature provides us with a clear interpretation. For now, however, it's important that human resources representatives, office managers and executives communicate with staff about the changes, since this will affect how employees manage their family's health care. 

Provision: Small business tax credit

Small businesses, defined as employers with no more than 25 employees and average annual wages of less than $50,000, will receive a tax credit of up to 35 percent of premiums, as long as they pay at least half the cost of health insurance for covered employees. Starting in 2014, the credit will increase to 50 percent for employers. Provisions also apply to employers with 10 employees or less.

Applies to: Employers with up to 25 full-time employees or with 10 or fewer employees

Effective date: Jan. 1, 2010 (special credit carry back rules apply)

Provision: Extension of dependent coverage

Adult children up to age 26 must be able to continue coverage on all health plans. Adult children can join or remain on their parent's plan whether they are married, living with their parents, financially dependent on their parents, or eligible to enroll in their employer's plan. There is one exception: Until 2014, "grandfathered" group plans do not have to offer dependent coverage up to age 26 if a young adult is eligible for group coverage outside their parents' plan.

Applies to: All employers

Effective date: Sept. 23, 2010, for plan or policy years beginning on or after that date

Provision: Ban on pre-existing conditions for minors

No pre-existing conditions may be imposed on a child under the age of 19.

Applies to: All employers

Effective date: This rule affected new policies issued after March 23, 2010. The rule will affect existing plans as soon as they begin a "plan" or "policy" year on or after Sept. 23, 2010. Effective, Jan. 1, 2014, no group health plan or self-insured plan may impose a pre-existing condition exclusion on anyone.

Provision: Ban on lifetime limits

No insured group health plan or self-insured plan may impose a lifetime dollar limit on "essential health benefits" as defined by the United States Department of Health and Human Services.

Applies to: All employers

Effective date: Sept. 23, 2010, for health plan years beginning on or after that date

Provision: Restrictions on annual limits

Insurance companies' use of annual dollar limits on the amount of insurance coverage a patient may receive will be restricted for new plans in the individual market and all group plans. Effective Jan. 1, 2014, annual limits on essential health benefits may not be imposed at all.

Applies to: All employers

Effective date: Sept. 23, 2010, for health plan years beginning on or after that date

Provision: Preventative health services

Group plans must provide certain maternal and preventative health services without cost-sharing requirements.

Applies to: All employers

Effective date: Sept. 23, 2010, for health plan years beginning on or after that date

Provision: Ban on rescinding coverage

No group health plan may rescind coverage of any individual once the individual has already become a covered participant, unless the individual has committed fraud or made an intentional misrepresentation of fact. In the past, for example, insurance companies could search for an error, or other technical mistake, on a customer's application and use this error to deny payment for services when he or she got sick. The new law makes this illegal.

Applies to: All employers

Effective date: Sept. 23, 2010, for health plan years beginning on or after that date

Provision: Over-the-counter expenses on health flexible spending accounts

Health flexible spending accounts will no longer be allowed to approve OTC medications. The change does not affect insulin, even if purchased without a prescription, or other health care expenses such as medical devices, eye glasses, contact lenses, co-pays and deductibles.

Applies to: All employers

Effective date: Jan. 1, 2011

Provision: Health FSA cap

The maximum employers are allowed to offer under health FSA programs will be $2,500 annually.

Applies to: All employers

Effective date: Jan. 1, 2013

Provision: New form W-2 reporting

Employers will be required to report both the employer's and the employees' cost for medical insurance.

Applies to: All employers

Effective date: The IRS announced Oct. 12, 2010, that it will defer the new requirement for employers to report the cost of coverage under an employer-sponsored group health plan, making reporting by employers optional in 2011. For more information, visit www.irs.gov. 

The author is head of human resources for Walters & Wolf, Fremont, Calif. Write her at MValdez@waltersandwolf.com.