Health care reform is a topic that is on everyone’s mind, and for good reason.
How health care reform evolves over the next several years will impact all of us. We have already witnessed more than 1 million dependents under the age of 26 being added to their parents’ employer group insurance plans.
In addition, these plans no longer have lifetime limits for coverage and many plans have removed any cost sharing, such as copays, deductibles and coinsurance for selected preventive services. High-risk pools have also been established for those who have previously had difficulty obtaining coverage, says Chuck Whitford, a client advisor with JRG Advisors, the management arm of ChamberChoice.
“As we move through 2012, there are several events that will determine exactly what health care reform will look like in 2014, the first full year of full reform implementation as spelled out in the Patient Protection and Affordable Care Act (PPACA) legislation that President Barack Obama signed into law more than two years ago,” says Whitford.
Smart Business spoke with Whitford about health care reform and the impact it will have on your business.
What is the first major action that will impact health care reform?
The first major action that will have an impact on reform will come in June from the United States Supreme Court. In March, the Supreme Court heard arguments over legal challenges to the health care reform law. The main controversy with the law has been whether Congress had the authority under the Constitution’s Commerce Clause to require individuals to purchase a product — health insurance -— or be required to pay a penalty (referred to as the individual mandate).
The court also heard a challenge to the health care reform law’s expansion of the eligibility requirements of Medicaid to cover individuals beginning in 2014. A third issue is whether the law can function as intended if the individual mandate is found to be unconstitutional.
Are there new requirements in the law that will impact employers?
The health care reform law does contain new requirements for 2012 that employers need to be aware of. The first one is the Summary of Benefits and Coverage (SBC), which must be provided to participants following the guidelines established by the regulations. The SBC will be limited to four double-sided pages and provides straightforward and consistent information about health benefits and coverage provided by the employer.
Its purpose is to help health plan consumers better understand the coverage that they have and to help make easy comparisons of different options. The SBC must be provided on the first day of the first open enrollment period that begins on or after Sept. 23, 2012.
What does the Patient Protection and Affordable Care Act require plans to provide?
PPACA requires plans and issuers to provide at least 60 days’ notice of any material modifications in plan terms or coverage. The final regulations clarify that plans and issuers are required to issue the 60-day advance notice when:
- A material modification is made that would affect the content of the SBC
- The change is not already included in the most recently provided SBC
- The change is a mid-plan year change — that is, it does not occur in connection with a renewal of coverage
Under the final regulations, plan and issuers must provide the SBC each year at renewal. When a plan timely provides the 60-day advance notice in connection with a material modification, the final regulations provide that the plan will also satisfy ERISA’s requirement to provide a Summary of Material Modification (SMM)
What changes are coming later this summer?
Effective for health plan years starting on or after Aug. 1, 2012, nongrandfathered plans must cover specific preventive health services for women with no cost sharing. These services include well-women visits, STD screening and contraceptives.
In addition, fully insured plans may be entitled to receive rebates in August 2012 if they qualify due to the medical loss ratio rules requiring insurance companies to spend a certain percentage of premium dollars on health care, rather than on administrative or other expenses. The rebates must be used for the benefit of the plan’s enrollees, which may include reducing enrollees’ premium payments.
Also, beginning with the 2012 tax year, employers that are required to issue 250 or more W-2 forms must report the aggregate cost of employer-sponsored group health coverage on employees’ W-2 forms. For now, smaller employers are exempt from this requirement until further guidance is issued, but they may be subject to it at a later date.
It has never been more critical for employers to understand what they must do to be in compliance with health care reform as it continues to evolve and be absolutely clear on their responsibilities from a reporting standpoint.
Advisors who are knowledgeable on health care reform can be a great asset to any organization as employers undertake a level of change that has never been seen before.
Chuck Whitford is a client advisor with JRG Advisors, the management arm of ChamberChoice. Reach him at (412) 456-7257 or firstname.lastname@example.org.
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