UBA produced a full briefing (below) on how the recent election outcome affects Patient Protection and Affordable Care Act (PPACA) implementation. This briefing includes specific PPACA compliance obligations employers must fulfill between now and 2014.
Maintenance of the status quo in Washington, D.C. (the re-election of President Barack Obama, with a Republican majority in the House of Representatives and a Democratic majority in the Senate) means that implementation of the Patient Protection and Affordable Care Act (PPACA) likely will move forward largely as the law was passed in 2010. Some have speculated that pressure to reduce the federal deficit may result in reduced funding for parts of the law, such as the premium credits available to individuals with lower incomes, but it is far too soon to tell how this factor may play out.
The law left working out many of the details to the regulatory agencies (the Department of Labor, the Internal Revenue Service and the Department of Health and Human Services), and with many questions remaining unanswered, employers can expect that an enormous number of regulations and other types of guidance will be issued between now and the end of 2013.
Of greatest interest to many employers is the employer-shared responsibility (“play or pay”) requirement. As of Jan. 1, 2014 employers who have 50 or more full-time or full-time equivalent employees must offer “minimum essential” (basic) medical coverage for their full-time (30 or more hours per week) employees or pay a penalty of $2,000 per full-time employee, excluding the first 30 employees. Employers who offer some coverage, but whose coverage is either not “affordable” or fails to provide “minimum value” must pay a penalty of $3,000 for each employee who receives a premium credit. (Coverage is not “affordable” if the employee’s cost of single coverage is more than 9.5 percent of income. Coverage does not provide minimum value if it is expected to pay less than 60 percent of anticipated claims.)
The health insurance exchanges are also scheduled to begin operation in January 2014. (While PPACA is a federal law, the health insurance exchanges were designed to be operated by the states.) A number of states have delayed work on the exchanges pending the outcome of this election, while a few have affirmatively decided not to create a state exchange. If a state is unable or chooses not to create an exchange, the federal government will run the exchange on the state’s behalf. According to the Kaiser Family Foundation, as of September 27, 2012, California, Colorado, Connecticut, District of Columbia, Hawaii, Kentucky, Maryland, Massachusetts, Nevada, New York, Oregon, Rhode Island, Utah, Vermont, Washington and West Virginia had established state exchanges. Arkansas, Delaware and Illinois were planning for a partnership exchange with the federal government. Alaska, Florida, Louisiana, Maine, New Hampshire, South Carolina and South Dakota had decided not to create an exchange (meaning the federal government will run the exchange on the state’s behalf). The remaining states are studying their options, but could well end up with a federally run exchange at least for 2014 as the deadline to submit the state’s plan for implementing an exchange is next week (Nov. 16). It remains to be seen whether the federal government will be able implement so many exchanges on behalf of the states by the 2014 target date. Because employees may choose to obtain coverage through the exchange even if they have access to coverage through their employers, and the exchanges likely will request information from employers, even those employers who plan to continue their current coverage will want to have an understanding of the status of their state’s exchange.
In addition to deciding whether to “play” (continue providing health coverage) or “pay” (the penalties), employers (including those with fewer than 50 employees) have a number of compliance obligations between now and 2014, including:
- Expanding first dollar preventive care to include a number of women’s services, including contraception, unless the plan is grandfathered
- Distributing medical loss ratio rebates, if any were received from the insurer
- Issuance of Summaries of Benefits and Coverage (SBC’s) to all enrollees
- Reducing the maximum employee contribution to $2,500, if the employer sponsors a health FSA, beginning with the 2013 plan year
- Withholding an extra 0.9% FICA on those earning over $200,000 beginning in 2013
- Providing information on the cost of coverage on each employee’s 2012 W-2, if the employer issued 250 or more W-2’s in 2011
- Providing a notice about the upcoming exchanges to all eligible employees in March 2013
- Calculating and paying the Patient Centered Outcomes Fee in July 2013 if the plan is self-funded (insurers are responsible for calculating and paying the fee for insured plans, but will likely pass the cost on)
- Working with the exchanges to identify those employees eligible for premium tax credits
- Removing annual limits on essential health benefits and pre-existing condition limitations for all individuals, beginning with the 2014 plan year
- Limiting eligibility waiting periods to 90 days, beginning with the 2014 plan year
- Reporting to the IRS on coverage offered and available (the first reports are actually due in 2015 based on 2014 benefits)
UBA has also developed a PPACA Decisions Executive Summary, which includes an overview of PPACA, decisions employers need to make regarding PPACA and additional obligations employers must fulfill between now and 2014.
It's also important to keep in mind that PPACA has different provisions depending on the size of your business. So, UBA offers The Expanded Decision Support Guides tailored for small businesses (under 50 employees), mid-sized businesses (50-100 employees) and large employers (more than 100 employees) that significantly expand on information presented in the Executive Summary, providing the most comprehensive PPACA compliance support.
An experienced advisor can help you further understand your options and obligations under PPACA. To contact a UBA member firm, visit: http://www.ubabenefits.com/AboutUBA/OfficeLocations/tabid/240/Default.aspx.
About United Benefit Advisors
One of the nation's top five employee benefits advisory organizations, United Benefit Advisors is a Member-owned alliance of more than 140 premier independent benefit advisory firms with more than 200 offices throughout the U.S., Canada and the U.K. As trusted and knowledgeable advisors, UBA Members collaborate with more than 2,200 professionals to deliver expertise, thought leadership and best-in-class solutions that positively impact employers and make a real difference in the lives of their employees and families. Employers, advisors and industry-related organizations interested in obtaining powerful results from the shared wisdom of our Members should visit UBA online at www.UBAbenefits.com.