Health Care Reform – Group Coverage Impact
This year has brought the most sweeping reforms to health care coverage since the new Patient Protection and Affordable Care Act. With over 2,000 pages of new federal law it will affect virtually every facet of the health care industry.
The federal health care reform law will have a substantial impact on employers. Here are the main issues employers will want to be aware of:
1. Keeping the same coverage
Employers will be able to avoid some of the law’s requirements by keeping their coverage the same after the law’s effective date (March 23, 2010). Unfortunately, it is very unclear at this time what kinds of minor changes will alter coverage or keep it the same; this will be clarified in later regulation.
Changes that must be made to all plans include:
waiting periods for coverage must be less than 90 days;
no lifetime benefit maximum limits;
dependent coverage for adult children up to age 26; and
no annual limits on certain types of benefits (unless permitted by later-issued regulation).
2. New benefit and other plan changes
If an employer does not keep its coverage the same, employers will need to make additional changes such as:
extending 100 percent coverage for preventive care;
removing any prior authorization requirement or increased cost-sharing for emergency services (regardless of whether the services are provided in or out of network);
no pre-existing limitation for children under age 19; and
coverage of routine patient costs in clinical trials for life-threatening diseases.
3. FSA/HRA/HSA changes
The law also will require changes to these types of accounts. In 2011, employees will no longer be able to receive pre-tax reimbursements from their FSA, HRA or HSA for non-prescribed over-the-counter medications. The excise tax for nonqualified HSA withdrawals will increase from 10 percent to 20 percent. In 2013, employee contributions to FSAs will be capped at $2,500 annually, with the cap adjusted annually to the Consumer Price Index.
4. Employee notification of value of coverage and exchange information
Effective in 2011, employers will need to start reporting the value of the employer-sponsored coverage to employees on their W-2s. And in March 2013, employers will need to begin notifying employees about state exchanges and the availability of premium subsidies and free choice vouchers, all of which will be available beginning in 2014.
Watch for future updates as we review these and other mandates and their implications to our industry. As we work to fully understand and implement new legislation, rest assured that our No. 1 priority is to stay focused on our customers each and every day and to meet and exceed their expectations by delivering value while improving their experience.
