by Ted Lewkowicz, Esq., Bond, Schoeneck & King, PLLC, Syracuse
On June 28, 2012, the U.S. Supreme Court upheld most of the Affordable Care Act (ACA) health care reform law, ruling that all of the act’s provisions are constitutional, other than a portion affecting Medicaid expansion.
Future challenges to implementation of some or all of the ACA are almost certain—through the electoral and legislative processes and additional litigation. However, those challenges are unlikely to result in any significant changes in the requirements of the act. It is extremely unlikely that any changes will occur before the end of this year.
On your ACA to-do list
That means there are a number of new requirements in the ACA that covered employers will need to comply with in the near future. These include:
• Finalizing the Summary of Benefits and Coverage (SBC). This is a statement that explains employees’ health benefits, which most employers will be required to provide on the first day of open enrollment this fall.
• Taking the steps necessary to comply with the $2,500 annual limit that will apply to health flexible spending accounts beginning in 2013. Employers must ensure that the new limit is accurately described in open enrollment materials to be distributed to eligible employees before the beginning of the 2013 plan year.
• Implementing procedures necessary to track and record health coverage costs in 2012. The ACA requires most employers to report the value of employees’ health benefits on 2012 W-2 tax statements to be distributed in January 2013.
• Coordinating with any insurer or administrator to make sure research fees mandated by the law are paid in 2013. The ACA imposes the fees on some issuers of health insurance policies and plan sponsors of self-insured health plans, starting with the first plan or policy year ending on or after Oct. 1, 2012.
In addition, medical loss ratio rebate requirements began applying to certain insured health plans on Aug. 1, 2012. If insurers fail to use a specified percentage of premiums to pay covered medical claims and quality-improvement expenses, they have to provide rebates to the applicable health plans.
This process should already be well under way. Consult your insurance provider or plan administrator to learn how it will affect your employees and discuss the payroll implications.
Considerations for coming years
In addition to these requirements, the ACA will impose numerous other requirements on covered employers in the next few years. Plan in advance to meet the applicable deadlines.
Here are some of the most important requirements:
• Certain health plans will have to implement preventive care requirements for women, starting with plan years that began or will begin after Aug. 1, 2012.
• Medicare payroll taxes and FICA taxes will increase in 2013 for certain highly compensated individuals.
• Certain employers will be required to provide a notice to their employees in March 2013 about the health insurance exchanges that will become operational in 2014. In addition to this notice requirement, certain employers will want to do an analysis in 2013 about how the health insurance exchanges might affect the health coverage they provide.
• The employer mandate to provide health insurance benefits (commonly referred to as the “play or pay” requirement) will apply in 2014 to certain employers that have at least 50 full-time equivalent employees. The employer mandate will require those employers to decide whether to provide minimum essential health coverage to their full-time equivalent employees in 2014 or pay a financial penalty.
• Also in 2014, nondiscrimination requirements for certain insured group health plans will apply (after the applicable regulations are issued).
Other looming requirements
Numerous other requirements will apply to many group health plans in 2014 or later, including expanded dependent coverage rules for “grandfathered” health plans and new pre-existing condition exclusion requirements. A restriction on eligibility waiting periods that exceed 90 days is coming, as is a requirement to eliminate all annual dollar limits for covered group health plans.
There will be new incentive/penalty requirements for wellness incentives and new requirements for minimum essential coverage requirements, clinical trial coverage and provisions regarding guaranteed availability and renewability of insured health coverages.
New automatic enrollment requirements will apply to certain employers after the applicable regulations are issued, and a new “Cadillac” plan excise tax will apply in 2018 if the aggregate value of certain health coverages exceed a specified amount.
Considerable guidance is going to be issued by the applicable governmental agencies to help employers implement the requirements described above. Monitor that guidance carefully to help ensure timely compliance with the coming requirements.
Ted Lewkowicz counsels employers on a wide spectrum of employee benefits and tax issues. Contact him at (315) 218-8131 or firstname.lastname@example.org.