VIEWS: 3 PAGES: 17 POSTED ON: 12/23/2010
NAVY Gold Coast Small Business Opportunity Symposium Health Care Reform What Does It Mean to ? Presented By: Richard Cleek General Manager, Administaff Service Operations Health Care Reform Bill is Complex • Over 2000 pages in length • Multitude of effective dates • Outcome from future regulatory guidance uncertain • Challenges to the constitutionality of the legislation are unlikely to be successful • Possibility of future legislative changes Health Care Reform Bill: The Basics • Health care reform legislation comprised of three bills – H.R. 3590 - Patient Protection and Affordable Care Act (PPACA) – “Managers Amendment” of PPACA – H.R. 4872 - Health Care and Education Reconciliation Act of 2010 • Signed by the President on March 23, 2010 (date of enactment) • Effective date of certain provisions depends on the issue date of regulations • Many details will be defined by additional guidance and regulations expected to come from DOL, IRS and HHS Health Care Reform Bill: The Basics • Greatest Impact On: – Employer Responsibilities – Employer-Sponsored Plans and Plan Design – Health Insurers (Carriers) • Health Care Reform is intended to preserve and work with the current system of providing health benefits through employer-sponsored coverage, supplementing that system as needed (through State Exchanges, subsidies and federal programs) to extend coverage to all individuals. Health Care Reform: Hot Topics • Small Business Health Care Tax Credit • Coverage for Adult Children up to Age 26 • W-2 Reporting of Value of Health Care Coverage • State Health Care Exchanges • Play-or-Pay Mandate • Cadillac Plans • Grandfathered Plans Small Business Health Care Tax Credit • Intended to help qualifying small businesses pay for health plan coverage. May be available for the employer portion of health insurance premiums paid in taxable years on or after January 1, 2010. • Eligible small business is defined as having no more than 25 FTE with average annual wages of $50,000 or less per employee. Employer must contribute at least 50% of the employee’s health insurance premium. • This tax credit is also available to qualifying businesses who utilize a Professional Employer Organization (PEO) for their benefit plans. • Details and FAQ’s can be found at www.IRS.gov Coverage for Adult Children to Age 26 • Coverage extended to adult children up to age 26 as of plan year effective January 1, 2011 • Special enrollment opportunity for eligible adult children not currently enrolled will be held in January, 2011 • Adult child not required to live with parents or attend college to qualify. Can be married but spouse and/or children of adult child do not qualify • Will result in additional costs to the employer’s plan W-2 Reporting of Aggregate Cost of Employee Health Care Coverage • Effective for tax year 2011 (W-2’s issued in Jan., 2012) • New payroll reporting requirement for the aggregate cost of employer-sponsored group health plan coverage on employee W-2’s • W-2 reporting does not impact the manner in which the employee pays for the coverage (e.g., after-tax or pre-tax contributions) • Does not include Health Care FSA’s, HSA’s or Dependent Care FSA contributions • Aggregate cost to be determined by using rules similar to COBRA • Reported amounts are not included in employee’s gross income State Health Exchanges & Individual Mandate • Beginning in 2014, States are required to establish Health Benefit Exchanges to facilitate the purchase of health insurance for individuals and small employers • Small employer is defined as an employer with <100 full time employees (States may set this number at <50 full time employees) • In 2014, Individuals are responsible for acquiring health insurance and maintaining minimum essential coverage for the entire year or face penalties Employee Free Choice Vouchers • Vouchers are for purchase of coverage through an Exchange and equals the contribution the employer would have made to its plan • Vouchers must be provided to employees: – Who do not participate in employer sponsored coverage AND – Whose household income is not more than 400% of the federal poverty level – Whose required contribution for minimum essential coverage through the employer plan exceeds 8% but is less than 9.5% of their household annual income • Does not necessarily trigger the “play or pay” penalty Play or Pay Mandate • Effective January 1, 2014 • Applies to employers of 50 or more FTE • In order to “play” and avoid the possibility of “paying”, an employer must offer an affordable group health plan with minimum essential coverage to all FTE’s and their dependents • “No coverage” penalty – Applies to employers not offering minimum essential coverage and at least one FTE receives subsidized coverage through an Exchange • “Subsidized coverage” penalty – Applies to employers offering minimum essential coverage to FTE if: • The coverage is unaffordable, and • The employee receives subsidized coverage through an Exchange Cadillac Plans • Beginning in 2018, a 40% Excise Tax will be imposed on “excess benefit” for employer-provided coverage for the employee • “Excess benefit” is coverage valued above $10,200 for single coverage and $27,500 for family coverage • Value includes FSA and HSA, but not dental and vision • Certain exceptions apply Grandfathered Plans • Health plan is grandfathered from certain provisions if it was in effect on date of PPACA enactment (3/23/10). Expressly allows for addition of new family members and new employees • Applies to only a few elements of the PPACA • Will lose grandfather status if: – Employee contributions increase by >5% – The third party administrator is changed – Deductible or out-of-pocket maximum increase by >15% – Copay increased by the greater of $5 or 15% – Employer contribution rate is decreased by >5% • So restrictive to qualify that most will not seek grandfather status Other Provisions Applying to Employer Plans • Lifetime and annual limits on essential benefits prohibited (2011) • Prohibits reimbursement of OTC drugs from FSA’s, HRA’s and HSA’s unless prescribed by physician (2011) • Uniform explanation of coverage provided to all employees in a four page, non-technical format (2012) • Health FSA capped at $2500 (2013) • Pre-existing condition exclusions prohibited for children (2010) and eventually for all enrollees (2014) • Waiting periods over 90 days prohibited (after 2014) Healthcare Reform - How Can Administaff Help? • Clients of Administaff can be assured that they will be well prepared for changes as they happen. Administaff will help our clients: – Understand how this legislation affects them through their co- employment relationship with Administaff – Take advantage of any opportunity presented by the changes – Achieve peace of mind knowing that health benefits and payroll services are being handled in a compliant manner Healthcare Reform Questions? • Visit www.administaff.com for additional guidance on healthcare reform • Visit www.IRS.gov for additional guidance on tax implications • Visit the U.S. Chamber of Commerce website www.uschamber.com/publications/reports/100426_critic al_employer_issues_ppaca.htm for additional guidance
"17j Richard Cleek Health Care Reform - Slide 1"