Health Care Reform 2012 Checklist

As we all know, there was a big push under federal health care reform for plan sponsors to amend health plans for the 2011 plan year. 

Though 2012 will not be a year of quite so many changes, there is still work to do to ensure you are in compliance with health care reform measures for the year under the Patient Protection and Affordable Care Act (PPACA).

You will need to add these "to dos" to your 2012 PPACA checklist:

1. What plan amendments are required?
2. What changes to claims procedures are required?
3. Are there new notice requirements?

Groom Law Group, Chartered, is a Washington, D.C.-based law firm that focuses exclusively on employee benefits issues.

Health Care Reform Reminder: New Regulations Finalized

Final regulations on summary of benefits and coverage (SBC) are available. Insurers, employers and administrators — pay close attention to these rules because they will apply to open enrollment that begins on or after September 23, 2012.

On August 22, 2011, the departments of Health and Human Services, Labor, and Treasury (the agencies) issued proposed regulations on the requirements for drafting and issuing SBCs and the uniform glossary that is required to be provided by plans as well.  

A summary of those proposed regulations are available here. 

On February 9, 2012, the agencies released final regulations on the requirements for drafting and issuing SBCs and the uniform glossary that is required to be provided by plans as well. The new rules take effect on April 16, 2012.   

The final regulations do not significantly modify the proposed regulations, and provide no flexibility or relief for large employer self‐insured plans despite a significant effort to get such relief.

Group health plans and issuers should pay close attention to the newly finalized SBC regulations because there is only a short amount of time to assemble necessary information, coordinate responsibilities between parties and prepare for distribution.

Failure to provide compliant SBCs could result in potential civil penalties for group health plans and health insurance issuers.

Groom Law Group, Chartered, is a Washington, D.C.-based law firm that focuses exclusively on employee benefits issues.

Departments Issue FAQ and Seek Comments on Health Care Reform Act Proposals

The departments of Labor, Health and Human Services, and the Treasury (the departments) issued a joint set of frequently asked questions addressing various provisions of the federal health care reform act.

The FAQ (Notice 2012-17) addresses questions relating to the following provisions of the health care reform act (Patient Protection and Affordable Care Act), including:

• Automatic enrollment of full-time employees in an employer’s health plan
• Shared responsibility of employers regarding health coverage
• 90-day waiting periods before an individual is eligible for health benefits

Many provisions of the health care reform act are slated to take effect in 2014 and are intended to expand access to health coverage. These three federal departments are working together to develop regulations and other administrative guidance to assist with implementation of the health care reform act.

One highlight from the FAQ is automatic enrollment: The automatic enrollment provision of the health care reform act requires certain large employers with more than 200 full-time employees to automatically enroll new full-time employees in one of the employer’s health benefit plans (subject to any legally authorized waiting period).

In what may be welcome news for large employers, the FAQ indicates that the regulations implementing this provision will not be ready by 2014: “In view of the need for coordinated guidance and a smooth implementation process, including an applicability date that gives employers sufficient time to comply, the Department of Labor has concluded that its automatic enrollment guidance will not be ready to take effect by 2014. It remains the Department of Labor’s view that, until final regulations under FLSA section 18A are issued and become applicable, employers are not required to comply with FLSA section 18A.”

The FAQ also outlines various approaches that the departments are considering proposing in future regulations and guidance materials. The departments said they welcome comments and input on all intended proposals.

Comments are requested by April 9, 2012. Follow the instructions listed on the notice and send the comments electronically to: e-ohpsca-er.ebsa@dol.gov. 

Alternatively, comments may be sent via mail or hand delivery to: Office of Health Plan Standards and Compliance Assistance, Employee Benefits Security Administration, Room N-5653, U.S. Department of Labor, 200 Constitution Avenue, NW, Washington, D.C., 20210.

Gail Cecchettini Whaley, CalChamber Employment Law Editor/Staff Counsel

Deadline Approaching to Claim Small Business Health Care Tax Credit

As the March 15 corporate tax filing deadline approaches, the California Chamber of Commerce is reminding small businesses to take advantage of the small business health care tax credit. The tax credit is part of the federal 2010 Affordable Care Act.

The credit is worth up to 35 percent of a small business's premium costs (25 percent for tax-exempt employers). In 2014, this rate increases to 50 percent (35 percent for tax-exempt employers).

California small businesses can review the Internal Revenue Service (IRS) guidelines to determine eligibility for the tax credit on the new business-oriented website, www.healthlawguideforbusiness.org. The website offers a “tax credit calculator” that helps employers estimate savings available under the law.

Qualifying for the Credit

To qualify, an employer must have fewer than the equivalent of 25 full-time workers (for example, an employer with fewer than 50 half-time workers may be eligible). A qualifying employer also must pay average annual wages below $50,000.

The credit phases out gradually for firms with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers.

To determine if they qualify, businesses may use this three-step fact sheet from the IRS. Eligible small employers will use Form 8941 to calculate the credit.

About the Credit

The small business health care tax credit helps small businesses and small tax-exempt organizations afford the cost of covering their employees. According to the IRS, small employers that pay at least half of the premium for employee health insurance coverage may be eligible for the small business health care tax credit. Small tax-exempt organizations also may qualify.

The IRS sent millions of postcards to small employers to let them know about the new small business health care tax credit and encourage them to check their eligibility. Even a business that didn't receive a postcard still may be eligible.

Additional information about eligibility requirements and calculating the credit can be found on the Small Business Health Care Tax Credit for Small Employers page of IRS.gov.

California Chamber of Commerce

IRS Guidance on Reporting Cost of Health Insurance

The IRS recently released an updated question and answer document for employers on reporting the cost of health insurance coverage on employees’ Form W-2s.

Under the federal health care reform law, employers must report the cost of coverage under an employer-sponsored health care plan. This requirement was optional for employers for calendar year 2011 because the IRS provided transition relief.

The updated FAQ from the IRS provides information on:

• The transition relief
• How to report the cost
• Which coverage to include
• How to determine the cost of coverage

For calendar year 2012, most employers will be required to report the cost of health benefits for individual employees on the employees’ Form W-2s  in box 12, using code DD. Employers will need to do so on the 2012 Form W-2 generally furnished to employees in 2013.

Certain smaller employers, and others who are covered by IRS transition relief, will still not be subject to the reporting requirement. For instance, small employers filing fewer than 250 Forms W-2 in 2011  are not required to report the value of employer-provided health care for 2012.

More information is provided in IRS Notice 2012-9, which was issued in January.

In addition, the IRS released a chart  that details the type of coverage that must be reported on the Form W-2.

Gail Cecchettini Whaley, CalChamber Employment Law Editor/Staff Counsel