The Obama Administration has announced it’ll be delaying enforcement of three important healthcare reform requirements directly affecting employers – plus two others impacting individual tax credits and subsidies. But a whole host of employer mandates haven’t changed.
What’s been delayed
The following requirements have been delayed until 2015:
1. Health coverage reporting
Under Obamacare, health plan sponsors and insurers must report to the IRS who is covered under their health plans during each month of the year. Sponsors and insurers also have to provide plan participants with statements detailing the information reported to the IRS about them.
2. Full-time employee and plan value reporting
Under the law, large employers (those employing 50 or more full-time equivalent employees) must notify the IRS of who their full-time employees are for each month of the year and whether they’re offered affordable, minimum-value coverage. And once again, the employers have to furnish statements to full-time employees detailing the info reported to the IRS about them.
3. Employer mandate penalties
The information employers are required to furnish in the above-listed requirements is to be used by the IRS to determine whether or not an employer is in compliance with the employer mandate. Those not in compliance will be assessed a shared responsibility penalty equal to either $2,000 or $3,000 per full-time equivalent employee.
But since the enforcement of the requirements has been delayed until 2015, no employer will be assessed a penalty next year for failing to provide affordable, minimum-value health insurance.
4. Employee coverage assertion verifications (impacts exchanges)
While enforcement of the employer mandate has been delayed, tax credits and subsidies are still going to be issued to health exchange customers who qualify for them.
When a health exchange customer claims he or she isn’t offered affordable, minimum-value coverage by their employer, Obamacare requires the exchange to verify the applicant’s claims to determine whether he or she is eligible for a tax credit. The enforcement of this requirement, however, has been delayed until at least 2015.
5. Oversight of individual income claims (impacts feds)
Also delayed until at least 2015 is the health reform requirement for the feds to strictly verify what applicants say they earn.
Under the law, uninsured and underinsured individuals with incomes that fall short of 400% of the federal poverty level will be eligible for some amount of subsidy. The less they earn, the greater their subsidy.
But the new regs say the feds will scale back oversight of what applicants say they earn, at least for 2014.
What hasn’t changed
Here’s what employers, plan sponsors and insurers still have to worry about complying with starting as early as July 31, 2013:
- Payment of the comparative effectiveness fee. For plan years ending on and after Oct. 1, 2012 through Sept. 30, 2019, all employer health plans must pay an annual fee to support “patient-centered outcomes research.” For calendar-year plans, this means the fee applies to your 2012 plan year. The fee is $1 per covered life the first year, and it doubles to $2 in the second plan year. It’s then adjusted for inflation during the final five years. Fees for the previous year are due July 31 every year. So for calendar-year plans, the fee for 2012 is due July 31, 2013.
- Distributing health exchange notices. Employers must provide a notice to all current employees informing them of their ability to purchase insurance via a health exchange. The notices are due to employees by Oct. 1, 2013. And new employees hired after that date must receive the notice at the time of their hire.
- Waiting period restrictions. Beginning in 2014, employees cannot be forced to wait longer than 90 days to be eligible for health plan coverage.
- Preexisting condition elimination. Also starting in 2014, plans will no longer be allowed to deny coverage to employees because they have a preexisting medical condition.
- Dollar limit elimination. From 2014 on, group health plans may not establish any annual or lifetime dollar limits on essential health benefits.
- Payment of reinsurance program fee. Under Obamacare, in 2014 insurers will have to pay a fee of $5.25 per health plan participant per month ($63 dollars per year). Self-insured companies will also have to pay the fee, which will fund the Transitional Reinsurance Program. In 2015, the fee is expected to drop to about $42 per participant per year. In 2016, it’s expected to fall to nearly $26. The money from the fee will be pooled in an account managed by the HHS. It will be used to reimburse insurance companies who end up covering a large share of individuals with pre-existing conditions. Those insurers will be eligible for reimbursement of a percentage of those individuals’ claims that exceed a specified amount.
- Establishment of a reasonable alternative standard in wellness programs. The agencies charged with implementation of the Affordable Care Act (the HHS, DOL and IRS) just issued final rules covering wellness programs that will kick in Jan. 1, 2014. They say that activity-only programs (those only requiring workers to complete a wellness activity, like a smoking-cessation class, to earn an incentive) must offer participants a reasonable alternative to the program to earn the incentive. But they can require a doctor’s verification that the employee can’t complete the original program for a medical reason. Outcome-based programs (those requiring workers to accomplish a goal, like quitting smoking, to earn an incentive), on the other hand, will be treated differently. They must offer a reasonable alternative to all employees, even those with medical conditions.
- Distributing summaries of coverage with revisions. New rules governing the summary of benefits and coverage (SBC) documents group health plans must provide to current and perspective plan participants will apply to plans with coverage that begins on or after Jan. 1, 2014. The new rules state that SBCs must answer these two questions: 1) Does this coverage provide minimum essential coverage? and 2) Does this coverage meet the minimum value standard?