Health Care Reform
The new health care reform legislation has and will cause many changes to the health insurance industry. If you have any questions, check the web site links below or feel free to call us for clarification. We will give you our best interpretation of the law. You may also want to talk to your accountant and/or attorney for more information.
Please understand that all of this information is subject to change!
Changes for 2010
Changes for 2011
Changes for 2012-13
Changes for 2014
- The individual mandate tax penalty takes effect. There are specified exceptions, and violators will be subject to a phased-in excise tax penalty for noncompliance of either a flat-dollar amount per person or a percentage of the individual’s income.
- States are required to have health benefit exchanges up and running to serve their individual and small-employer markets. If a state fails to create a federally certified exchange, HHS will step in and operate an exchange for the state. HHS will also allow a state to elect a hybrid state/federal partnership model overseen by HHS.
- Significant insurance market reforms for all individual market and fully insured group market policies take effect. All plans must be offered on a guaranteed-issue basis, preexisting condition limitations will be prohibited, annual and lifetime limits will be fully prohibited, including for grandfathered plans, and the size of a small-employer group will be redefined to one to 100 employees (although states may elect to keep the size of a small group at 50 employees until 2016). In addition, all fully insured individual and small groups up to 100 employees (although states may elect to keep the size of small groups at 50 employees until 2016) will have to abide by strict modified community rating standards with premium variations only allowed for age (3:1), tobacco use (1:5:1), family composition and geographic regions, to be defined by the states, and experience rating will be prohibited.
- Standards for qualified coverage, which will apply to all fully insured small group and individual products to be sold both inside and outside the exchanges, begin. These include the essential health benefits standards that will cover specific mandated benefits, cost-sharing requirements, out-of-pocket limits and a minimum actuarial value of 60%
- Cooperative plans are allowed to be sold through state-based health insurance exchanges. Multistate national plans will be offered to individuals and small employers through state exchanges.
- Premium assistance tax credits for individuals and families making between 100-400% of the federal poverty level (FPL) begin. These refundable and advanceable subsidies will be available only for people who qualify to purchase individual coverage through an exchange. The subsidies are available in the individual exchange irrespective of whether the exchange is a state-based exchange or a federally-facilitated exchange.
- Expansion of the Medicaid program for all individuals, including childless adults, who make up to 133% of the FPL, is scheduled to begin. The ruling by the Supreme Court in NFIB v. Sebelius prohibits the federal government from withholding other federal Medicaid funds if the state refuses to expand their Medicaid programs. Mandatory state-by-state employer premium-assistance programs will begin for those eligible individuals who have access to qualified employer-sponsored coverage. States can also create a separate non-Medicaid plan, called the Basic Health Plan, for those with incomes between133% and 200% of FPL, that do not have access to employer sponsored coverage. Basic Health Plan rules had not been issued as of February, 2013.
- The employer responsibility requirements take effect for companies that employ more than 50 full-time equivalents. Calculation of the number of full-time equivalent employees is complicated. Counting of seasonal employees was partially addressed in proposed rules issued on January 2, 2012, but more guidance is required to address all situations. Coverage must meet a minimum value standard in order to be considered compliant with the mandate. Coverage must also meet affordability requirements. Employers who do not offer coverage to full time employees and their dependent children or do not offer them coverage that meets minimum value and affordability standards and have employees who obtain subsidized coverage through the exchanges will be fined.
- For employers that have a waiting period for coverage for new employees, waiting periods of more than 90 days are prohibited for all plans.
- Employers of 200 or more employees have to auto-enroll all new employees into any available employer-sponsored health insurance plan. The effective date of this provision was originally assumed to be January 1, 2014, but an effective date was actually not specified in the law. The DOL has issued guidance that this provision will not be enforced until regulations are issued and that such regulations are not expected until after 2014.
- A national premium tax on most private health insurers based on premium volume takes effect, which can be passed directly to fully insured plan consumers.
- Employer-sponsored wellness program rules for all employer group plans under HIPAA improve and employers can increase the value of workplace wellness incentives. There will be a pilot expansion of wellness programs to individual market consumers in 10 to-be-selected states.
Other links of interest: