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Individuals & Families
Health Care Reform

Health Care Reform

How is Aflac different from major medical insurance?

Aflac policies are considered HIPAA excepted benefits because they are not major medical health coverage. Being excepted, these benefits are generally excluded from rules and regulations designed for major medical coverage.

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Health care reform and policy resources

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

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Aflac isn’t major medical insurance:
Supplemental insurance policies are considered HIPAA excepted benefits and aren’t major medical insurance.

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Advisories:
Get a full analysis and details about new and pending legislation from the Aflac Federal Relations team.

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FTE Calculator:
Not sure of your full-time equivalent employee count? Use this tool to determine your FTEs.

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Health Care Policy Timeline

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.

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

 

 
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Women’s preventive care requirements

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. Under regulations, certain employers are exempt from the requirement to offer contraceptive coverage.

Medical loss ratio rebate distribution

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, and for 2014 and later years, Sept. 30.

Encouraging integrated health systems

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.

Quality of care reporting

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.

Reducing paperwork and administrative 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.

New summary of benefits and coverage (SBC)

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.

Patient-Centered Outcomes Research Institute (PCORI) fee

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 plan or policy subject to the fee, 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. The fee is temporary and does not apply to plan years ending on or after Oct. 1, 2019.

W-2 reporting requirement

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.

Health flexible spending arrangement contribution limit

The ACA limits the amount of participant pretax dollars that can be used to cover health expenses through flexible spending accounts (FSAs).

Medicare retiree drug subsidy tax deduction eliminated

Employers will no longer be able to deduct retiree drug expenses for which they receive a Medicare Part D retiree drug subsidy payment.

Increased Medicare Part A tax on wages and investment income

Health care reform imposes an additional 0.9 percent hospital insurance tax and a separate 3.8 percent net investment income tax on higher income individuals to help fund Medicare Part A.

Expanded authority to bundle payments

Health care professionals collaborate to improve coordination and quality of care.

Notice about the health insurance marketplace

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.

HHS provides transition relief for “grandmothered” plans:

HHS provided temporary relief from some of the second wave of health reform requirements that go into effect in 2014. Relief is provided, if permitted under state law, for individual and small group policies renewed between Jan. 1, 2014 and Oct. 1, 2014. The transition relief was subsequently extended through Dec. 31, 2017.

Individual mandate

Health care reform requires almost all Americans to have qualifying health coverage (QHC) that offers minimal essential coverage (MEC), or pay a penalty. The mandate is repealed in 2019.

Small Business Health Options Program (SHOP) and individual health insurance marketplace

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.

Required contribution to the temporary reinsurance program

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 credit changes

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 COBRA notices

Updated model notices inform eligible employees about government marketplace options.

Clinical trials

Nongrandfathered 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.

Health insurance industry fee

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. The fee is suspended for 2019.

Wellness program incentives

Maximum reward is 30 percent of costs or 50 percent for programs related to tobacco use.

Second wave of health insurance reforms

  • Pre-existing condition exclusions will no longer be permitted. Applies to both grandfathered and non-grandfathered plans; however it does not apply to grandfathered plans in the individual market.
  • There will be no annual dollar limits on benefits on essential health benefits. Does not apply to grandfathered plans in the individual market.
  • Small-group fully insured plans will be required to offer essential health benefits (does not apply to grandfathered plans).
  • Limits will be placed on out-of-pocket expenses (does not apply to grandfathered plans).
  • Health insurers will be subject to modified community ratings and guaranteed-issue requirements.
  • Waiting periods in excess of 90 days will be prohibited.
  • Nongrandfathered individual market and small group health plans must meet metal tier requirements based on the percentage of costs the plan is expected to cover: 60 percent Bronze; 70 percent Silver; 80 percent Gold; 90 percent Platinum.

Shared-responsibility payment phase I

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.

Supreme Court ruling on King v. Burwell

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.

Shared-responsibility payment phase II

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.

Small-business definition

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.

IRS reporting requirements for employers

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.

New individual out-of-pocket rules

Non-grandfathered family plans must have an “embedded” individual out-of-pocket maximum.

Presidential election – Nov. 8, 2016

Marketplace expansion option

With approval from Health and Human Services (HHS), states will have an option to open their public marketplace to any size employer.

Executive Order

The President signs an executive order directing federal regulatory agencies to develop rules to minimize the economic and regulatory burden of the Patient Protection and Affordable Care Act and to prepare to afford states more flexibility and control of health care markets.

Individual mandate to have minimum essential health coverage or pay a penalty is repealed.

Individuals are no longer required to have health insurance or pay a tax penalty. Health insurers fee is suspended for one year.

New Cadillac Tax effective date:

A tax will be imposed on insurers and employers with self-funded health plans with annual premiums that exceed certain dollar thresholds. The tax was originally scheduled to take effect in 2018. The dollar thresholds in 2018 would have been $10,200 for individual coverage and $27,500 for family coverage. These dollar amounts are indexed so that if the tax does go into effect in 2022, and is not repealed or further delayed, the dollar thresholds will be higher as adjusted for inflation. The amount of the tax is 40 percent of the excess of the value of coverage over the dollar thresholds.

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The Cadillac tax

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The Cadillac tax is equivalent to 40 percent of the cost of health coverage beyond a certain threshold, depending on the type of plan. Since it isn’t scheduled to take effect until 2020 and regulations may evolve before it is implemented, employers do not need to make changes to their policies in anticipation of the tax just yet. It’s important to wait for further guidance as 2022 draws near – including the tax threshold amounts and other implementation details. Learn more:

Benefits coverage reference guide

This easy-to-understand chart helps you compare health plan options.

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Reporting

OOP Costs 101

Simple definitions of medical and non-medical costs.

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How Aflac can help

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Aflac insurance policies don’t replace comprehensive health insurance coverage. Supplemental insurance policies are considered HIPAA excepted benefits, which are excluded from most of the Affordable Care Act’s market reforms.

  • Aflac is for specified injuries, illnesses or disabilities. For example: a broken arm, heart attack, cancer or hospital stay.
  • Aflac helps cover out-of-pocket costs that major medical insurance was never designed to cover. Even with major medical insurance, potential out-of-pocket costs associated with illness or injury can be considerably high.

Make Aflac part of your benefits package today.
Aflac cash benefits can be used for everyday living expenses such as rent or monthly mortgage, utilities, groceries, childcare or to cover out-of-pocket medical expenses.

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