Patient Protection and Affordable Care Act

On Sunday March 21st, the U.S. House of Representatives passed the “Patient Protection and Affordable Care Act”.  The House and Senate also passed the “Health Care and Education Affordability Reconciliation Act”, which the President is to have signed into law today.  Below is a link to a timeline of the health insurance reforms that will impact private health insurance coverage over the next several years.  The timeline is provided by the National Association of Health Underwriters based in Arlington, VA, www.nahu.org .

The 2500+ page bill is hard to summarize. We are not dealing in media sound  bites any longer.  As  business owners and group administrators we now need to know the fine points for implementation.  Keep in mind, there will be another 7 to 10 years of rule-making, clarifications and changes as the new provisions are implemented.  DDI Benefits is committed to providing resources along the way. Following are ONLY highlights of some of the changes that will impact you as an employer group.  The link “view the timeline” goes into detail on each of the provisions.  View the timeline

As an employer, here’s what you need to know now…

• Grandfathered Plans:  Individuals and employer group plans that wish to keep their current policy on a grandfathered basis can if the only plan changes made are to add or delete new employee/dependents or part of a collective bargaining agreement. The reconciliation bill eliminated the ability of plans to grandfather in a number of areas.
  • If you lose your grandfathered status, that DOES NOT MEAN you will be forced into an Exchange in 2014.
  • Grandfathered status is available for plans in effect on the date of enactment of the law.
• Small Business Premium Tax Credit: Eligible small businesses are eligible for phase one of the small business premium tax credit.
  • Small employers will receive a maximum credit, based on number of employees, of up to 50% of premiums for up to 2 years if the employer contributes at least 50% of the total premium cost.
  • Tax credit is retroactive for premiums paid in taxable years beginning after December 31, 2009

Need to know for 2010…

• Dependent Age rule: All group and individual plans, including self-insured plans, within six months of enactment, will have to cover dependents up to age 26.
• Wellness Program Grant for small employers:  Federal grant program for small employers providing wellness programs to their employees will take effect on October 1, 2010

Need to know for 2011-2013…

• See following link for details, especially the tax implications for employers and individuals   View the timeline

Need to know for 2014, when majority of changes are implemented…

• Rating of Groups:  All individual health insurance policies and all fully insured group policies 100 lives and under (and larger groups purchasing coverage through the exchanges) must 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 would be prohibited.
• Wellness discounts are allowed for group plans under specific circumstances.
• Redefines small group coverage as 1-100 employees.
  • States may also elect to reduce this number to 50 for plan years prior to January 1, 2016.

• State Exchanges:  Requires each state to create an Exchange to facilitate the sale of qualified benefit plans to individuals, including new federally administered multi-state plans and non-profit co-operative plans.  States may choose to allow large groups (over 100) to purchase coverage through the exchanges in 2017
• Employer Vouchers:  Requires employers to give a voucher to use in the individual market or exchange instead of participating in the employer-provided plan.
  • Employees must be ineligible for subsidies
  • The value of vouchers is the employer contribution adjusted for age
• Employer Mandate: The employer responsibility requirements take effect for companies that employ more than 50 Full time Employees. Coverage must meet the essential benefits requirements in order to be considered compliant with the mandate.
• When determining whether an employer has 50 employees, the reconciliation bill changed the calculation of employees so that part-time employees must be taken into consideration based on aggregate number of hours of service.
• Fine for noncompliance is $2000 per employee annually, but first 30 employees not counted (i.e., if the employer has 51 employees and doesn’t provide coverage, the employer pays the fine for 21 employees).
• An employer with more than 50 employees that does offer coverage but has at least one FTE receiving the premium assistance tax credit will pay the lesser of $3,000 for each of those employees receiving a tax credit or $750 for each of their full-time employees total.
• Individual Mandate:  Requires all American citizens and legal residents to purchase qualified health insurance coverage.
  Exceptions provided for:
  • religious objectors,
  • individuals not lawfully present
  • incarcerated individuals,
  • those who cannot afford coverage,
  • taxpayers with income under 100 percent of poverty,
  • members of Indian tribes,
  • those who have received a hardship waiver
  • those who were not covered for a period of less than three months during the year
  • People with no income tax liability

We will face many changes over the next several years.  We are committed to partnering with you to provide the best employee benefits solutions for your employees in our changing environment.  Please don’t hesitate to contact us with any questions along the way.  Please note that any errors, or omissions of information, is unintentional.  Please refer to the link provided for further details on the many provisions.    View the timeline