1. Evaluate Grandfathered or Non-Grandfathered Status of Plan
A grandfathered plan is one that was in effect on March 23, 2010. If a plan loses its grandfathered status, it may no longer be exempt from certain requirements under Health Care Reform.
- Determine whether any changes to the plan that reduce benefits or increase costs to employees and dependents enrolled in coverage result in a loss of grandfathered status.
- To maintain grandfathered status, provide a statement indicating the plan believes it is a grandfathered health plan, along with contact information for questions and complaints, whenever a summary of benefits under the plan is provided to participants and beneficiaries (model notice available here).
2. Review Plan Documents for Required Changes to Plan Benefits
Certain requirements apply on a plan year basis, meaning the changes take effect when a group health plan begins a new plan year. As a result, compliance deadlines may vary.
- Annual limits on “essential health benefits” are being phased out according to the limits set by law (no lower than $2 million for plan years starting between September 23, 2012 and January 1, 2014).
- Note: Certain limited benefit or “mini-med” plans that received temporary waivers from the rules concerning annual dollar limits, as well as stand-alone HRAs in effect prior to September 23, 2010 which are automatically exempt until January 2014, must distribute an annual notice to participants and subscribers stating that the plan has restrictive coverage and includes low annual limits (required language for the notice is available for bothlimited benefit plans and stand-alone HRAs).
- For plan years beginning on or after January 1, 2013, salary reduction contributions to health flexible spending arrangements (FSAs) are limited to $2,500 annually, indexed for inflation for subsequent plan years. Written cafeteria plans must be amended by December 31, 2014 to reflect this change.
- Except for grandfathered plans, coverage of additional women’s preventive services such as well-woman visits, breastfeeding support, domestic violence screening, and contraception is provided without cost-sharing requirements, starting with plan years beginning on or after August 1, 2012.
- Note: Group health plans sponsored by certain religious employers are exempt from the requirement to cover contraceptive services. Additionally, certain non-profit organizations with religious objections to contraceptive coverage are provided more time—until the first plan year beginning on or after January 1, 2014—to comply with this requirement, provided that certification and notice requirements are met. Special Update: Effective for plan years beginning on or after January 1, 2014, accommodations are provided for certain non-exempt, non-profit religious organizations that object to contraceptive coverage on religious grounds. Click here for more.
3. Provide Required Notices to Employees and Dependents
Please contact your carrier or employment law attorney if you have questions regarding these notices.
Availability of Health Insurance Exchanges
- Special Update: Not later than October 1, 2013, employers are required to provide each current employee a written notice with information about a Health Insurance Exchange (also known as a Marketplace). Employers must provide the notice to each new employee at the time of hiring beginning October 1, 2013. Model language that employers may use to satisfy the notice requirement is available from the U.S. Department of Labor:
Summary of Benefits & Coverage (SBC) and Notice of Plan Changes
- Starting with plan years and open enrollment periods beginning on or after September 23, 2012, provide participants and beneficiaries, without charge, a summary of benefits and coverage at specified times during the enrollment process and upon request, generally as follows:
- Upon application, as part of any written application materials for enrollment (or, if such materials are not distributed, no later than the first date the participant is eligible to enroll);
- By the first day of coverage, if there are any changes to the SBC from the time of application;
- Within 90 days of special enrollment, for individuals entitled to “special enroll” in group health plan coverage under HIPAA when certain work or life events occur;
- Upon renewal, at the same time that open season materials are distributed (or, if renewal is automatic, generally no later than 30 days prior to the first day of the new plan year); and
- No later than 7 business days following receipt of a participant or beneficiary’s request.
(Insured group health plans may satisfy this requirement if the issuer provides a timely and complete SBC to the participant or beneficiary. Templates, instructions, and related materials are available from the Center for Consumer Information & Insurance Oversight.)
- Additionally, if any material modification is made in any of the terms of the plan or coverage that would affect the content of the SBC, that is not reflected in the most recently provided SBC, and that occurs other than in connection with coverage renewal or reissuance, the plan or issuer must provide notice to enrollees not later than 60 days prior to the effective date of the change.
4. Report Employer-Provided Health Plan Coverage on Forms W-2
This requirement does not apply to employers that were required to file fewer than 250 Forms W-2 for the preceding calendar year, unless and until the IRS publishes further guidance giving at least 6 months’ advance notice of any changes.
- Beginning with calendar year 2012 Forms W-2 (required to be furnished to employees in January 2013), employers that provide a group health plan to their employees are generally required to report the cost of the coverage provided to each employee annually.
5. Other Action Items for 2013
The following additional items may be of significance for certain employers and group health plans.
- Additional Medicare Tax for High Earners. Employers are required to withhold Additional Medicare Tax (at a rate of 0.9%) on wages or compensation paid to an employee in excess of $200,000 in a calendar year, for taxable years beginning after December 31, 2012. There is no “employer match.”
- Comparative Effectiveness Research Fees. Effective for plan years ending on or after October 1, 2012, and before October 1, 2019, plan sponsors of self-insured plans and health insurance issuers are responsible for new fees to fund the Patient-Centered Outcomes Research Institute (PCORI). Fees are due no later than July 31 of the year following the last day of the policy or plan year. Click here for a useful chart from the IRS showing the application of the PCORI fees to common types of health coverage or arrangements. Special Update: The IRS has revised Form 720, Quarterly Federal Excise Tax Return, for employers sponsoring HRAs and other self-insured health plans to report and pay the new PCORI fees. Click here for more information.
- Medical Loss Ratio (MLR) Rebates. Employers who receive rebates, as a result of insurance companies not meeting specific standards related to how premium dollars are spent, may be responsible for distributing the rebates to eligible plan enrollees. Rebates are due to employer-policyholders by August 1 each year. These rules do not apply to employers who operate self-insured plans.
- Simple Cafeteria Plans. If eligible, consider whether your company could benefit from establishing a simple cafeteria plan, which may be treated as meeting certain IRS nondiscrimination requirements.
- Small Business Health Care Tax Credit. Determine if your company qualifies for the small business health care tax credit. For tax years 2010–2013, the maximum credit is 35% for small business employers. Use Form 8941, Credit for Small Employer Health Insurance Premiums, to calculate the credit.
- Start Preparing for 2014. With some of the most significant provisions of Health Care Reform set to take effect in 2014, including the “pay or play” requirements for employers with 50 or more full-time equivalent employees, all employers are encouraged to review their benefit plans with a knowledgeable attorney or trusted benefits advisor to prepare for the changes ahead. Current “pay or play” guidance for employers is available in the proposed rules and related questions and answers. Special Update: The U.S. Treasury Department has announced that it will delay enforcement of the “pay or play” requirements for one year. As a result, any penalties (also known as employer shared responsibility payments) will not apply until 2015. Click here for more information.