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Affordable Care Act: the Bottom Line What you need to know today about health care reform This is only a brief summary that reflects our current understanding of select provisions of the law, sometimes in the absence of regulations. All of the interpretations contained herein are subject to change as the appropriate agencies publish additional guidance.

Setting the Stage The Affordable Care Act (ACA) is over 1,000 pages of legislation, drafted and enacted very quickly Rules are still being developed – most of health reform is not yet on the page –Federal agencies are developing regulations –States have implementation responsibilities, including establishing the Exchanges

Bottom Line There are relatively few things that need to be done now –Plan design changes –Open enrollment activities (including some employee communications) –Reporting –FSA reimbursements

Plan Design Changes – Grandfathering Grandfathered status is available for health plans providing coverage as of March 23, 2010 –Grandfathered status will end if make certain changes to benefits or employer contributions –Value: some delayed effective dates –Must comply with notice/recordkeeping requirements

Plan Design Changes All plans must comply with the following for plan years on or after Sept. 23, 2010: –Preexisting condition limits for children prohibited –Lifetime limits prohibited –Annual limits restricted –Rescissions prohibited –Must cover adult children to age 26

Plan Design Mandates Non-grandfathered plans must comply for plan years on/after Sept. 23, 2010: –Insured plans may not discriminate –Must cover preventive care without cost- sharing –Must provide direct access to PCPs, OB/GYNs, and emergency care –Must follow new internal/external review standards

Plan Design Mandates– Excepted Benefits Accident/AD&D Disability Dental Vision Long-term care Health FSAs Specified disease insurance (e.g., cancer) Hospital indemnity or other fixed indemnity insurance HSAs The following “HIPAA excepted benefits” are exempt from the plan design mandates:

Open Enrollment Activities 30-day enrollment must be provided to individuals who were previously excluded from the plan due to the imposition of lifetime limits or age –Applicable for the first plan year beginning on or after Sept. 23, 2010 May want to use enrollment to help educate and counsel employees about the changes from ACA

Open Enrollment Notices The following notices must be provided for the first plan year beginning on or after Sept. 23, 2010: –Notice of grandfathered status (if applicable) –Notice regarding lifetime limits –Notice regarding adult child eligibility

Reporting Requirements Must report value of employer-provided health coverage on Form W-2 beginning in 2011 –W-2s to be provided in 2012 –IRS guidance is expected Non-grandfathered plans must make transparency disclosures to HHS for plan years on/after Sept. 23, 2010

FSA Reimbursements Health FSA participants may be reimbursed for medical expenses for adult children –Effective as early as March 30, 2010 if the employer amends the plan this year Beginning Jan. 1, 2011, over-the-counter drugs may only be reimbursed with a prescription

Going Forward Health plan costs are expected to increase dramatically over the next several years Possible approaches to plan sponsorship: –Maintain current coverage –Encourage employee participation in high deductible health plans with HRAs or HSAs –Drop coverage and help employees purchase Exchange coverage

Bottom Line Find out whether the plan is grandfathered Plan for open enrollment Confirm who will send required notices Watch for W-2 guidance Amend 125 plan and educate employees about health FSA changes Anticipate health plan cost increases

Humana and state of Kentucky –Questions about your specific medical plan –May be able to assist with communication materials American Fidelity Resources

American Fidelity is Here to Help American fidelity can help you: –Focus what you need to do next –Identify resources and summary information –Provide employee communication materials –Meet with employees one-on-one to educate them about upcoming plan changes and help resolve their questions and concerns –Possibly help with future reporting obligations

Thank you! This is only a brief summary that reflects our current understanding of select provisions of the law, often in the absence of regulations. All of the interpretations contained herein are subject to change as the appropriate agencies publish additional guidance.