HR: Healthcare Reform Update
The Patient Protection & Affordable Care Act was enacted in March of last year. Despite the legal challenges facing health care reform, employers can expect the provisions will continue. Employers should be aware of provisions taking effect in the next few years. These include:
Beginning in 2012, optional for 2011, employers will be required to report the value of each employee's medical, dental, vision and certain supplemental benefits.
Medicare Prescription Coverage
Subsidies to eliminate the "donut hole" gap in Medicare Part D coverage for prescription drugs will begin phasing in for completion by 2020.
Health Care FSA Contribution Cap
A cap of $2,500 will be placed on the amount of funds an employee can save in a Health Care Flexible Spending Account (FSA).
Health Exchange Notification
Employers will be required to give a notice to their employees if they are eligible to participate in a state-based health insurance exchange.
Play or Pay Mandate
Employers with more than 50 employees will be required to pay $2,000 per employee if they do not provide health coverage for employees eligible for a subsidy on insurance exchanges. The first 30 employees would be exempt from the penalty.
Small Business Tax Credits
The 35% tax credit that went into effect in 2010 for businesses with fewer than 25 employees will increase to up to 50% of the cost of employees' premiums.
State Health Insurance Exchanges
States will be required to establish online health insurance exchanges to facilitate the purchase of coverage by individuals and small groups. If states do not fulfill this requirement, the federal government will create an exchange for them.
Individuals will be required to carry minimum essential health care coverage. Those who cannot demonstrate that they have coverage will be required to pay a penalty. Certain individuals may be exempt.
Waiting Period Restrictions
Employers will be required to eliminate waiting periods beyond 90 days when enrolling new employees in a group health plan.
Adult Pre-existing Conditions
Group health plans will be required to eliminate any pre-existing condition exclusions for adults. The plans will also have to eliminate annual limits on essential benefits coverage for adults.
The above provisions have the potential to increase costs and administrative burdens for businesses. It’s essential for employers to be aware of the requirements and take the necessary steps needed to avoid penalties.
Additional information on healthcare reform can be found at http://www.healthreform.gov/