I doubt you really need me to tell you that it’s 2015, or what that means, right? This is the year the rubber really begins to meet the road for Affordable Care Act compliance. Maybe you feel that you’ve heard enough about the Patient Protection and Affordable Care Act and you know what you need to know. Maybe you feel you will never get it so you kind of shut down when you hear about it. Since the ACA is not going away and it has undergone some changes since its enactment, let’s see where we are with it now. Let’s start with some ACA requirements that are not talked about as much, some of which are actually in effect now, and some misconceptions about those requirements — after the jump of course…
Why we are bothering with points that may already be in place or are not “key” issues? If you haven’t addressed the points covered here, you may need to do so immediately or face penalties. If you’ve done it all, then you know you can breathe more easily. If you have harbored some of the misconceptions mentioned here, you have more clarity about the lesser known requirements, which can’t hurt. Here are some of them:
PCORI and Other Health Benefits Taxes and Fees: You are probably already paying fees to the Patient Centered Outcomes Research Institute (PCORI). PCORI works with patients and health care providers to create healthcare systems around patients’ preferences. The fee of $2.08 per member per year is based on the average number of lives covered by policies with plan years ending after October 1, 2012 and before October 1, 2019. Employers with self-funded insurance plans pay that fee directly. If you have a traditional, (i.e. fully funded) plan, where you pay a set premium to an insurance carrier and the carrier pays the claims, your insurance carrier is paying it. In reality your company is really the one paying it, because the insurance company can factor the fee into its determination of your premium. Additionally, companies with fully funded plans pay annual fees on health insurance carriers; all employers pay a transitional reinsurance program fee of $63 per member per year for all plans beginning January 1, 2014 and $43 per member per year for all plans beginning January 1, 2015. If you don’t pay on time, penalties and interest accrue.
Notification about the Healthcare Marketplace and Medicaid: Effective October 1, 2013 you must notify all existing employees –full-time and part-time–of: a) the existence of the Health Marketplace, and b) possible premium assistance if i)they are eligible for Medicaid or the Children’s Health Insurance Program (CHIP); and ii) if their state is involved in the Medicaid expansion program as options for obtaining coverage. New employees must be notified within 14 days of their hire date. The good news is regarding notification about the Health Marketplace, you do not have to write the notice yourself. You can use the template provided by the Department of Labor, which you can find here.
What if you don’t do it? Contrary to the rumors there are no penalties for non-compliance. Here are reasons you should do it anyway: a) If you offer affordable coverage but your employee gets insurance through an exchange for lower premiums, or gets Medicaid, you don’t pay for that employee’s coverage. Moreover, you are not penalized, because you did what you were supposed to do; b) For comparatively minimal effort you help foster more open, positive communication with your employees about an often confusing topic. Employees who feel taken care of are less likely to become disgruntled and file lawsuits, charges or make calls to government agencies that trigger investigations later.
Changes to Waiting Periods: You can no longer require new employees to wait more than 90 days after s/he becomes eligible for coverage. Many assume that this means you must insure eligible employees as soon as they have been with you for 90 days. That is not necessarily true. The 90-day limit kicks in from the time the employee becomes eligible. You can condition eligibility on a) the employee obtaining a specific license or certification; or b) completing an orientation period (which cannot be more than 30 days); or c) completion of a specified number of hours (which cannot exceed 1200). If you invoke one of these three conditions, the 90 days begin to run, once the employee meets one of these conditions. Theoretically you could make an employee complete 1200 hours, which is 30 weeks based on a 40-hour week and then wait 90 days before s/he is covered under your plan. That may not be your best option for attracting and keeping good talent, however. You get my point though. You can invoke one of the these three conditions, which could buy you more time if you need to do so.
W-2 Reporting: Beginning in January 2013 for 2012, many employers were required to report the aggregate cost of health insurance coverage on your employees’ W-2’s, so that employees know more about their health care costs. The benefits are not taxable to the employees. Penalties for non-compliance start at $30 per W-2, with a $1.5 million cap. This is a requirement you want to stay on top of –if you are subject to it. If you are an employer who issued fewer than 250 W-2’s in 2012 you not only were not subject to this requirement in 2013, but you won’t be until the IRS issues further guidance on the issue. The IRS has not yet done so and has yet to indicate when it intends to. In other words, if you have fewer than 250 employees, you remain exempt from this requirement indefinitely.
A similar requirement, often confused with the W-2 reporting is the requirement to provide both the IRS and each “primary” insured a written statement of the prior year’s coverage. Penalties are $100 per tax return up to $1.5 million. There is some relief if the failure is due to “reasonable cause” or if the employer timely corrects it.
Out-of-Pocket Maximums: Your plan must now have annual limitations cost-sharing for covered services. For individuals the limit for 2015 is $6,600 and for families the 2015 limit is $13,200. Maximums are set annually. Once the employee meets the applicable maximum, by paying deductibles and co-pays, s/he is no longer obligated to pay anything else out-of-pocket for covered services, including prescriptions. Depending on your plan, this cap can increase your premium if you do not make other offsetting benefits changes. Out-of-network changes are not included in this limit, by the way.
OK, that is quite enough for now! Let’s pick this up next week and get some clarity on grandfathered plans and the if-you-like-your insurance-you-can-keep-it situation. See you then!
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Disclaimer: This post’s contents are for informational purposes only, are not legal advice and do not create an attorney-client relationship. Always consult with competent employment counsel on any issues discussed here.
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