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UPDATE ON HOT ISSUES IN HEALTH CARE – WHAT’S AN EMPLOYER TO DO? Alice E. Helle BrownWinick 666 Grand Avenue, Suite 2000 Des Moines, IA 50309-2510 Telephone:

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Presentation on theme: "UPDATE ON HOT ISSUES IN HEALTH CARE – WHAT’S AN EMPLOYER TO DO? Alice E. Helle BrownWinick 666 Grand Avenue, Suite 2000 Des Moines, IA 50309-2510 Telephone:"— Presentation transcript:

1 UPDATE ON HOT ISSUES IN HEALTH CARE – WHAT’S AN EMPLOYER TO DO? Alice E. Helle BrownWinick 666 Grand Avenue, Suite 2000 Des Moines, IA 50309-2510 Telephone: 515-242-2407 Facsimile: 515-323-8507 E-mail: helle@brownwinick.com

2 KEY PROVISIONS OF THE AFFORDABLE CARE ACT THAT ARE ALREADY IN EFFECT Small Employer Tax Credits Dependent Benefits for Adult Children (up to age 26)

3 KEY PROVISIONS OF THE AFFORDABLE CARE ACT THAT ARE ALREADY IN EFFECT No Lifetime Limits on Essential Health Benefits Restricted Annual Limit on Essential Health Benefits (no less than $750,000 for 2011)

4 KEY PROVISIONS OF THE AFFORDABLE CARE ACT THAT ARE ALREADY IN EFFECT 100% Coverage Preventative Services and immunizations – No Cost Sharing oN/A to Grandfathered Plans (but grandfathered plans may adopt)

5 KEY PROVISIONS OF THE AFFORDABLE CARE ACT THAT ARE ALREADY IN EFFECT Rescissions of Coverage Not Allowed Absent Fraud, Misrepresentation or Nonpayment of Premiums No Pre-Existing Condition Limitations for Children Under Age 19

6 KEY PROVISIONS OF THE AFFORDABLE CARE ACT THAT ARE ALREADY IN EFFECT Internal and External Appeals Provisions oN/A to Grandfathered Plans OTC Drugs Not Reimbursable by HSA/FSA/HRA Absent a Prescription oException for Insulin

7 KEY PROVISIONS OF THE AFFORDABLE CARE ACT THAT ARE ALREADY IN EFFECT Simple Cafeteria Plans oDeemed to Satisfy Nondiscrimination Requirements of IRC § 125 oLimited to Employers w/ Fewer than 100 Employees

8 KEY PROVISIONS OF THE AFFORDABLE CARE ACT THAT HAVE BEEN DELAYED OR ELIMINATED Nondiscrimination Rules – IRC § 105(h)(2) – DELAYED oPreviously applied only to self-insured health plans oGenerally prohibit discrimination in favor of top 25% of employees oExcise tax of $100/day/employee oN/A to Grandfathered Plans oRules were to be effective for plan years beginning after 9/23/10  Delayed indefinitely for regulations  Comment period expired in March of 2011

9 KEY PROVISIONS OF THE AFFORDABLE CARE ACT THAT HAVE BEEN DELAYED OR ELIMINATED Reporting on Form 1099 – REPEALED oWould have greatly expanded 1099 reporting requirements Reporting on Form W-2 – DELAYED oValue of employer-provided health insurance to be reported on Form W-2 (informational only) oOriginally effective for 2011  Now effective for 2012 for employers who issue 250+ W-2s  Effective for 2013 for smaller employers oIRS recently issued Notice 2012-9

10 KEY PROVISIONS OF THE AFFORDABLE CARE ACT THAT HAVE BEEN DELAYED OR ELIMINATED Automatic Enrollment – DELAYED oEmployers w/ 200+ employees will be required to automatically enroll new employees oDelayed indefinitely for regulations oNot likely to take effect prior to 2014

11 KEY PROVISIONS OF THE AFFORDABLE CARE ACT THAT HAVE BEEN DELAYED OR ELIMINATED Small Business Wellness Grants – DELAYED oGrants totaling $200 million over 5 years oEmployers with fewer than 100 employees and no existing wellness program eligible for grants oWas to be available 2011 oDelayed indefinably – Congress did not fund

12 KEY PROVISIONS OF THE AFFORDABLE CARE ACT THAT HAVE BEEN DELAYED OR ELIMINATED CLASS 1 Program – SUSPENDED oVoluntary long-term care insurance program for working adults oChampioned by Senator Kennedy oWould have provided up to $50/day for nursing home care or home health care after years of paying monthly premiums oNo employer obligation, but employers permitted to provide for participation by payroll deduction _______________ 1 Community Living Assistance Services and Supports

13 KEY PROVISIONS OF THE AFFORDABLE CARE ACT THAT HAVE BEEN DELAYED OR ELIMINATED oStatute required program to be affordable, self-sustainable and actuarially sound for at least 75 years  Administration analysts determined that basic CLASS insurance plan might cost $235 - $391/mo for $50/day benefit  Program suspended due to concern that not enough people would enroll to make it sustainable

14 KEY PROVISIONS OF THE AFFORDABLE CARE ACT THAT HAVE BEEN DELAYED OR ELIMINATED Free-Choice Vouchers – REPEALED oWould have been effective in 2014 for employers of 50+ employees

15 PREVIEWS OF COMING ATTRACTIONS Summary of Benefits and Coverage (SBC) oUniform summary of benefits in format specified in regulations  12-point font  No more than 4 duplexed pages  Must include a uniform glossary of terms  Must include at least three different coverage examples to illustrate common scenarios under which coverage would be provided oTemplate provided with Notice of Proposed Rulemaking – Copy is included in your materials oPurpose is to help participants better understand their health coverage and other coverage options oTentative effective date is March 23, 2012

16 PREVIEWS OF COMING ATTRACTIONS Continued Phase-In of Annual Limit Rule – Essential Health Benefits o09/23/11 - $1,250,000 o09/23/12 - $2,000,000 o2014 – no annual limits permitted

17 PREVIEWS OF COMING ATTRACTIONS Limits on Health Flexible Spending Arrangements (FSAs) oContributions limited to $2,500/year effective 2013

18 PREVIEWS OF COMING ATTRACTIONS FICA Medicare Tax Rate Increase for Certain Employees oEffective 2013 oThe Medicare tax rate is increased from 1.45% to 2.35% for earnings over the threshold of $200,000 for an individual or $250,000 for a married couple filing jointly oThe employer’s portion of the tax is not affected oThe employer will be responsible for collecting the additional Medicare tax due from the employee oEmployers are not responsible for determining a spouse’s earnings

19 PREVIEWS OF COMING ATTRACTIONS Plan Amendments – 2014 oNo pre-existing condition limitations oNo waiting periods over 90 days oNo out-of-pocket limits greater than the limits for high- deductible health plans (currently $5,950/11,900)  N/A to grandfathered plans oWellness program rewards based on satisfaction of health standards can’t exceed 30% of the cost of employee-only coverage (currently 20%) N/A to grandfathered plans oExpanded coverage of clinical trials  N/A to grandfathered plans

20 PREVIEWS OF COMING ATTRACTIONS Exchange Notice oNotice deadline is March 31, 2013 oNotice must inform employees of:  The existence of the exchanges  The services provided  How to contact the exchanges to request assistance.  The availability of premium assistance if the employer’s share of the cost of benefits is less than 60% The circumstances under which the employee loses employer contributions to the health plan and explaining that tax-free employer contributions may be lost when an employee enrolls in an exchange plan

21 PREVIEWS OF COMING ATTRACTIONS State Insurance Exchanges – 2014 o“Marketplace” where individuals and small employers (under 50 employees) may purchase health insurance oMust offer four levels of coverage with different benefit levels and actuarial values oTo participate, insurers must agree to charge the same premium for each Qualified Health Plan regardless of whether it is offered inside or outside the exchange oPlans must offer plans similar in scope to “typical” employer-sponsored plans

22 PREVIEWS OF COMING ATTRACTIONS Reporting Requirements – 2014 oCoverage – IRC § 6055  Plans providing “minimum essential coverage” to an individual must file report with IRS with info re covered persons  Plans must also provide statement to individuals who were listed on report filed with IRS oAdditional Reporting – Large Employers – IRC § 6056  Applies to employers subject to § 4980H (50+ employees)  Must file report that includes info re premiums and contributions

23 PREVIEWS OF COMING ATTRACTIONS Individual Mandate – Effective 2014 oIndividuals required to have health coverage or pay a penalty  2014 – greater of $95 or 1% of household income  2015 – greater of $325 or 2% of income  2016 - greater of $695 or 2.5% of income oSubsidies  Premium assistance tax credits for individuals with income between 100% and 400% of the federal poverty level  Cost-sharing subsidies for individuals with income up to 250% of the federal poverty level to reduce out-of-pocket costs for plans purchased through an exchange

24 PREVIEWS OF COMING ATTRACTIONS Large Employer Mandate (50+) oMust offer “minimum essential coverage” or pay a tax penalty oIf employer does not offer coverage, penalty is $2,000 per employee, except that number of employees is reduced by 30 in calculating the penalty oIf the employer offers coverage but doesn’t meet affordability and value tests, penalty is $3,000 for each full-time employee who receives premium assistance through an exchange

25 STATUS OF CONSTITUTIONAL CHALLENGES More Than 20 Lawsuits Challenging ACA Filed In The Federal District Courts To Date o6 courts have ruled the law constitutional o3 courts ruled at least part of the law unconstitutional o9 cases dismissed on procedural grounds

26 STATUS OF CONSTITUTIONAL CHALLENGES 8 Cases Have Reached The Federal Courts Of Appeals o2 are still pending o4 ruled against plaintiffs on various procedural grounds o2 ruled on the constitutionality of the Act  6th Circuit Court of Appeals found the law constitutional on 06/29/11 Thomas More Law Center v. Obama  11th Circuit Court of Appeals found the individual mandate to be unconstitutional on 08/12/11 Florida v. HHS

27 STATUS OF CONSTITUTIONAL CHALLENGES Thomas More Law Center v. Obama oPlaintiffs argued that the Commerce Clause doesn’t permit the government to compel people to buy health insurance because that would be regulating “inactivity.” oDistrict Court (E. D. Michigan) rejected that argument – decision not to buy insurance has an impact on health care providers and taxpayers and therefore is an activity that “substantially affects interstate commerce.” oThe 6th Cir. affirmed, ruling that Congress had a rational basis to impose the individual mandate. o2-1 ruling oPlaintiffs appealed to the Supreme Court on July 27

28 STATUS OF CONSTITUTIONAL CHALLENGES Florida v. HHS oDistrict Court (N. D. Florida) determined that the individual mandate was unconstitutional under the Commerce Clause oAlso found that it was not severable from the remainder of the Act, so struck down the entire Affordable Care Act oThe 11th Cir. found the individual mandate unconstitutional (by a 2-1 vote) but determined that it is severable from the rest of the Act, which is “legally operative.” oThe government appealed to the Supreme Court on September 28

29 STATUS OF CONSTITUTIONAL CHALLENGES Supreme Court has accepted and will hear arguments in March o3/26 – 1 hour on whether the Anti-Injunction Act blocks a challenge prior to 2014 o3/27 – 2 hours on the constitutionality of the individual mandate o3/28 – 2½ hours on the severability of the individual mandate and the constitutionality of the Medicaid expansion Decision expected in June or July

30 Website: www.brownwinick.comwww.brownwinick.com Toll Free Phone Number: 1-888-282-3515 OFFICE LOCATIONS: 666 Grand Avenue, Suite 2000 Des Moines, Iowa 50309-2510 Telephone: (515) 242-2400 Facsimile: (515) 283-0231 616 Franklin Place Pella, Iowa 50219 Telephone: (641) 628-4513 Facsimile: (641) 628-8494 DISCLAIMER: No oral or written statement made by BrownWinick attorneys should be interpreted by the recipient as suggesting a need to obtain legal counsel from BrownWinick or any other firm, nor as suggesting a need to take legal action. Do not attempt to solve individual problems upon the basis of general information provided by any BrownWinick attorney, as slight changes in fact situations may cause a material change in legal result.


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