Benefits Update, No. 3, August 2012: Timeline Of Health Insurance Reform


[author: Callan Carter]

As everyone knows, the Patient Protection and Affordable Care Act was upheld in a somewhat surprising Supreme Court decision last month. (For a recap of the decision see our Legal Alert on the case).

Set out below is a timeline of changes, deadlines, and in some cases decisions, that will face employers going forward. As always if you have any questions, just give one of the Fisher & Phillips benefits attorneys a call.

Reform Effective Date
W2 inclusion of cost of employer-sponsored health coverage for employers who filed more than 250 Forms W2 in prior year. 2012 Forms W2, due 1/31/13
Medical Loss Ratio Rebates to be paid by insurers. Employers mayneed procedures in place governing how such amounts will be treatedand allocated. 8/1/12
New standardized summary of benefits and coverage (SBC). 60-dayadvance notice of any material change. The initial distribution of SBCs was delayedto open enrollment periods beginning on orafter 9/23/12.
Extension of Waiver of Annual Limits: Plans wanting to extend theirwaiver of the restrictions on annual limits must reapply by deadline. 12/31/12
Self-funded health plans must pay comparative effectiveness fee of $1in 2013 (then increased to $2) per participant. Insurance carriers payfee for fully-insured policies/plans. Scheduled to end 2020. Plan Years/Policy Years ending after 9/30/12
Group plans must report annually to HHS and plan participants aboutplan benefits designed to improve the quality of care Upon issuance of regulations
Automatic enrollment for large employer plans (more than 200 F/T employees) . Employers must provide notice of auto enrollment and opportunity to opt out. Upon issuance of regulations
Nondiscrimination rules of 105(h) apply to fully-insured non-grandfathered plans Upon issuance of regulations
Elimination of employer deduction for subsidy under Medicare Part D(immediate impact on employers' liability and income statements) ER Tax Years beginning after 12/31/12
Health FSA max election of employee salary deferrals limited to$2,500 1/1/13
Additional .9% Medicare tax on wages and self-employment incomefor individuals earning more than $200,000 ($250,000 MFJ). New3.8% Medicare tax on the lesser of 1) net investment income or 2) theportion of MAGI exceeding $200,000 ($250,000 MFJ) 1/1/13
Threshold for the itemized deduction for unreimbursed medicalexpenses increased from 7.5% of AGI to 10% of AGI for regular taxpurposes (waived for individuals age 65 and older for tax years 2013through 2016) 1/1/13
Employer notice of availability of Exchanges and if employercontribution is <60% of cost, availability of premium assistance andfact that employee will lose employer contribution to coverage inExchange 3/1/13
National health insurance Exchanges begin, to be administered bya new federal Agency, the "Health Choices Administration." Thecategories of people and businesses qualified to purchase coveragethrough the Exchange would be phased in over three years' time to upto 100 employees and the commissioner has the authority to expandthe Exchange to larger groups 2014-2016
Health Insurance Premium Assistance Credit and/or cost sharingreduction for households with income 100-400% of poverty line 1/1/14
Individuals must have minimum essential health insurance coveragefor themselves and their dependents 1/1/14
Employer reporting to IRS whether health coverage offered to F/Temployees 1/1/14
Standards for qualified coverage, including mandated benefits, cost-sharing requirements, out-of-pocket limits and a minimum actuarialvalue 1/1/14
Play or Pay: Employers must offer coverage or, if they employ at least50 full-time equivalent (based on 120 hours/month or 30 hours/week)employees, they must pay a fine. Coverage must meet the essentialbenefits requirements and maximum employee contribution to becompliant 1/1/14
No waiting periods longer than 90 days No waiting periods longer than 90 days
No annual limits on benefits allowed Plan Years beginning on and after 1/1/14
Elimination of all pre-existing condition limitations or exclusions on allparticipants Plan Years beginning on and after 1/1/14
Wellness incentives increased from 20% to 30% of the cost ofemployee-only coverage 1/1/14
Cadillac plan tax: 40% on coverage in excess of $10,200 for singlecoverage or $27,500 for family coverage. Paid by employer if self-insured and by carrier if fully-insured. 1/1/18

For more information contact the author at or (415) 490.9000.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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