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Health Care Reform
Trying to decide which parts of the law apply to your business? This tool will quickly help you identify key issues to consider.
You don’t have to wade through thousands of pages of “legalese” to get the facts; here you can find clarified details for businesses and employees.
There have been some big changes made to health care, and more are on the way.
Click the milestones to explore how the changes might affect you.
2010
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2020
The Affordable Care Act is signed into law on March 23, 2010.
If you offer your workforce health insurance and employ fewer than 25 full-time workers (or 50 part-time workers), your business may be eligible for the Small Business Health Care Tax Credit.
Group health plans that make dependent coverage available must make such coverage available until a child turns age 26.
Companies with plans that covered employees on March 23, 2010, became eligible for grandfathered status. Grandfathered plans are exempt from a number of mandates and reporting requirements but also cannot make significant changes to benefits or costs.
Health insurance companies are required to make health plan options available for consumers online. This requirement applies only to fully insured individual policies and small-group plans.
For plan years beginning on or after Sept. 23, 2010, all nongrandfathered individual and group health plans must have an effective appeals process for coverage determinations and claim decisions. The law requires plans and issuers to offer an external review process meeting minimum requirements.
Employers cannot compensate highly paid individuals with better benefits.
Temporary high-risk pools gave health insurance to people with pre-existing conditions who have not had insurance for at least six months. These pools were made available until state exchanges began operating and selling insurance in 2014.
Every year the federal government will review plan premium increases. Health and Human Services is establishing a process to review unreasonable increases. This provision applies only to fully insured individual policies and small-group plans.
Coverage cannot be retroactively canceled on any plan.
People select their choice of primary care physicians, pediatrician and OB-GYN
Annual and lifetime limits on essential health benefits are no longer allowed.
Emergency services must cost the same in and out of network.
Plans cannot deny benefits and coverage to dependent children under 19 with pre-existing conditions. No pre-existing condition limitations were extended to everyone in 2014.
Plans must cover certain preventive services and immunizations at no cost to the enrollees.
This program started June 1, 2010, and ended Jan. 1, 2014. It paid employers for part of the cost of health benefits they pay for retired employees age 55 and over, their spouses and dependents.
Milestones include the availability of simple cafeteria plans, restrictions on reimbursement of over the counter medicines, a health savings account distribution tax penalty and elimination of the Medicare Part D coverage “Donut Hole”.
Simple cafeteria plans are a new way for small businesses with 100 or fewer employees to take advantage of tax savings. Similar to traditional cafeteria plans, the simple cafeteria plan removes the obstacle of nondiscrimination requirements, applicable to highly compensated and key employees, which impact many small employers. These plans allow employees to pay their portion of health insurance premiums and other eligible benefits, such as contributions to flexible spending accounts, with pretax dollars. As an employer, you can take advantage of this option to save on the employer portion of FICA, FUTA and workers’ compensation insurance premiums.
Tax-favored plans, including health flexible spending arrangements (FSAs) and health reimbursement arrangements (HRAs), cannot be used to reimburse over-the-counter medicines.
Health Savings Accounts are taxed when used to buy items that are not listed medical expenses.
Health care reform reduces coinsurance for generic drugs over time, from 100 to 25 percent.
Nongrandfathered group health plans are required to offer preventive coverage to women without cost sharing for plan years beginning on or after Aug. 1, 2012. Certain religious employers are exempt from the requirement to offer contraceptive coverage, and others may qualify for a one-year delay or special accommodation.
Major medical insurers that did not meet the new medical loss ratio (MLR) requirements were required to issue rebates to policyholders by Aug. 1, 2012. In most cases, it is the employer’s responsibility to distribute the participant portion within three months of receiving the rebate. The details on distribution depend on the type of plan offered (e.g., church plan, ERISA, etc.). In the future, any rebate due must be paid by Aug. 1 of each year.
Health care reform creates incentives for doctors to form accountable care organizations (ACOs). These organizations allow doctors and other health care professionals to better coordinate patient care to help prevent disease and illness and reduce unnecessary hospital admissions or re-admissions.
The Department of Health and Human Services is developing rules for how plans report on benefits and how they pay health care providers to improve the quality of care and reduce costs.
Health plans are required to adopt rules for the secure, confidential and electronic sending of health information. Standard documents could reduce paperwork and administrative duties, lower costs and decrease medical errors.
Major medical insurers began sending all benefits enrollees and applicants a new summary of benefits booklet and coverage notice to explain their benefit plans and coverage. Self-funded plans were required to provide the new summary for annual enrollment periods on or after Sept. 23, 2012, as well as all other enrollments for plan years beginning on or after Jan. 1, 2013.
Starting with plan years ending on or after Oct. 1, 2012, issuers and plan sponsors are required to pay a new fee for the number of lives covered under each policy, with the fee going to the PCORI fund. The funds will help contribute to research that evaluates and compares health outcomes and clinical effectiveness as well as the risks and benefits of two or more medical treatments and/or services. Since the fee is treated as an excise tax, it is filed through IRS Form 720. The PCORI fee is $1 per covered beneficiary for the first year and is due July 31, 2013, for the first year.
All employers that issued at least 250 Form W-2s in 2011 will need to report the value of health care coverage that employees participated in during the 2012 plan year on the employee’s Form W-2. Some items, such as stand-alone dental, vision and health savings account contributions, are excluded from this reporting requirement. Although the value must be reported, it is not taxable for the business or employee.
The ACA limits the amount of participant pretax dollars that can be used to cover health expenses through flexible spending accounts (FSAs). Learn more.
Employers will no longer be able to deduct retiree drug expenses for which they receive a Medicare Part D retiree drug subsidy payment.
Health care reform taxes higher incomes to help fund Medicare Part A.
Health care professionals collaborate to improve coordination and quality of care.
Employers subject to the Fair Labor Standards Act are required to notify employees of the health insurance marketplace and potential eligibility for premium credits. The first notice was required by Oct. 1, 2013. Learn more.
Health care reform requires almost all Americans to have qualifying health coverage (QHC) that offers minimal essential coverage (MEC), or pay a penalty. Learn more.
Effective 2014, small businesses and individuals will have the opportunity to participate in the federal- and state-facilitated health insurance marketplace. Specific information by state can be found at healthcare.gov.
During the first-three years of insurance market reforms (2014-2016), a temporary reinsurance program for the individual insurance market will be funded by a required contribution from all group major medical plans. The per capita amount is paid for each enrollee by the insurer or the self-funded plan.
Small-business tax credits will expand to 50 percent of a small business’s premium costs for two consecutive years. These credits are available to businesses with average wages between $25,000 and $50,000, that have fewer than 25 full-time workers (or 50 part-time workers) and that offer health insurance through the Small Business Health Options Program (SHOP) marketplace.
Updated model notices inform eligible employees about government marketplace options. Learn more.
Health care plans must not discriminate against a policyholder because of a clinical trial and can’t deny people from participating in clinical trials. They can’t limit coverage of routine patient costs for items and services in connection with the trial.
This fee on health insurers, including HMOs, is based on each insurer’s share among all health insurers of U.S. health risks. It starts at $8 billion in 2014 and increases year over year before reaching $14.3 billion in 2018. In December 2015, the Health Insurance Industry Fee was suspended for 2017.
Maximum reward is 30 percent of costs or 50 percent for programs related to tobacco use.
Employers with at least 100 full-time equivalent employees must offer affordable, minimum value health coverage to at least 70 percent of their full-time employees and their dependents, unless the employer qualifies for 2015 dependent coverage transition relief, or face a penalty.
On June 25, 2015, the Supreme Court ruled on an important issue affecting health insurance in the U.S. The decision upheld a key part of the Affordable Care Act by affirming an eligible individual’s ability to obtain subsidized health insurance through a federal exchange.
Open enrollment for individuals and businesses begins on Nov. 1, 2015, for state and federal exchanges for coverage that begins Jan. 1, 2016.
Employers with at least 50 full-time equivalent employees must offer affordable, minimum-value health coverage to at least 95 percent of their full-time employees and their dependents, or face a penalty.
Most states define small businesses as those with 50 or fewer employees, but the Affordable Care Act was originally set to expand the definition in 2016 to include those with 51 to 100 employees, including full-time equivalents (FTEs). The president signed a bill on Oct. 7, 2015, that no longer requires states to expand their definition. Instead, states can use their own discretion. The new law is meant to help curb premium hikes in the small-group market. Learn more.
Businesses are required to report information regarding the health coverage of your employees, including basic employee data, dates and type of coverage; cost-sharing; and any other information required by the IRS. These requirements apply to coverage offered on or after Jan. 1, 2015, but the first report will not be due until 2016. Learn more.
Nongrandfathered family plans must have an “embedded” individual out-of-pocket maximum.
With approval from Health and Human Services (HHS), states will have an option to open their public marketplace to any size employer.
A tax will be imposed on insurers and employers with self-funded health plans with annual premiums that exceed $10,200 for individuals and $27,500 for family coverage. These amounts will be indexed for inflation in future years. The Cadillac tax is 40 percent of the excess of the annual value of a health plan’s cost above the threshold amounts set forth above. Learn more.
The costs of Medicare Part D prescription drug coverage are addressed by health care reform.
This material is intended to provide general information about an evolving topic and does not constitute legal, tax or accounting advice regarding any specific situation. Aflac cannot anticipate all the facts that a particular employer or individual will have to consider in their benefits decision-making process. We strongly encourage readers to discuss their HCR situations with their advisors to determine the actions they need to take or to visit healthcare.gov (which may also be contacted at 1-800-318-2596) for additional information.
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†One Day PaySM available for most properly documented, individual claims submitted online through Aflac SmartClaim® by 3 p.m. ET. Aflac SmartClaim® is available on most Accident, Cancer, Hospital, Specified Health, and Intensive Care policies. Aflac processes most other claims in about four days. Processing time is based on business days after all required documentation needed to render a decision is received and no further validation and/or research is required. Individual Company Statistic, 2017.
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