Health Care Reform Update
6/5/2012By
Various provisions of the Patient Protection and Affordable Care Act take effect in 2012 and 2013. This is an update of those provisions that most affect employers.
W-2 Reporting of Health Insurance Value
Starting with the 2012 tax year (for Forms W-2 required to be issued by the end of January 2013), employers who sponsor applicable group health plans must report the aggregate value of the coverage on the Form W-2. Until further guidance is issued, employers filing fewer than 250 Forms W-2 in the previous year are exempt from this reporting requirement. This reporting is for informational purposes only and does not affect the taxability of the coverage.
IRS Notice 2012-9 restates and clarifies earlier guidance. It contains useful information on the type of coverage for which reporting is required, calculating the cost of coverage, and more. The guidance can be found on the IRS website at http://www.irs.gov/pub/irs-drop/n-12-09.pdf
Health FSA Contribution Limit
Effective January 1, 2013, employee pre-tax contributions to health FSAs will be limited to $2,500 per calendar year, regardless of the plan year. The limit will be adjusted annually for inflation. Employers will need to amend their plans and employee communication materials accordingly.
UPDATE: On May 30, the IRS issued Notice 2012-40 clarifying that the health FSA contribution limit of $2,500 will apply for plan years beginning on or after January 1, 2013. For non-calendar plan years, the limit will not apply until the plan year begins in 2013. For example, the limit will not apply for a plan year of October 1, 2012 through September 30, 2013. It will first apply for the next plan year beginning October 1, 2013.The IRS Notice 2012-40 can be found here.
Medical Loss Ratio Rebate
This provision of the law applies to fully-insured plans. Beginning January 1, 2011 insurance carriers are required to disclose to the Department of Health and Human Services (HHS) the percentage of premium dollars spent on claims and health care quality improvement (medical loss ratio).
Carriers will be required to provide rebates to enrollees when their medical loss ratios are less than 85% in the large group market and less than 80% in the individual and small group market. The carrier’s medical loss ratio is based on aggregate market data in each state and not on a particular group health plan’s experience.
The reports for 2011 are due to HHS by June 1, 2012, and rebates are required to be provided by August 1.
The US Department of Labor (DOL) issued guidelines to assist ERISA plan sponsors determine if the rebate is a plan asset, and if so, how the rebate can be used to benefit plan participants. The DOL Technical Release 2011-04 can be found at http://www.dol.gov/ebsa/newsroom/tr11-04.html.
Uniform Summary of Benefits and Coverage (SBC) and Uniform Glossary
This provision applies to both fully-insured and self-insured plans.
Insurers of group health plans and plan administrators must provide plan participants and beneficiaries with a Summary of Benefits and Coverage (SBC) and a Uniform Glossary. The SBC must accurately describe the benefits and coverage of the plan and be presented in no more than four double-sided pages. The SBC does not replace the summary plan description.
The Uniform Glossary defines terms commonly used in health insurance coverage. The Uniform Glossary is a standard document, developed by the federal government, and must be made available with no changes.
The final regulations, an SBC template and Uniform Glossary, can be found on the US DOL web site at http://www.dol.gov/ebsa/healthreform/.
In addition, this provision requires that certain accommodations be made when notices are sent to addresses in a county where 10% or more of the population is literate only in the same non-English language. The Department of Health and Human Services has issued the list for 2012 of the affected counties. That list can be found at http://www.cciio.cms.gov/resources/factsheets/clas-data.html. Watonwan County is the only county listed for Minnesota. This list will be updated annually.
The DOL has issued two sets of FAQs on the Summary of Benefits and Coverage, including information on non-English requirements.
These can be found on the DOL website at http://www.dol.gov/ebsa/faqs/faq-aca8.html and http://www.dol.gov/ebsa/faqs/faq-aca9.html.
These requirements are effective as of the first day of the first open enrollment period that begins on or after September 23, 2012.
For participants and beneficiaries who enroll in coverage other than through open enroll, the requirements are effective as of the first day of the first plan year beginning on or after September 23, 2012.
Comparative Effectiveness Research Fee
This provision applies to both fully-insured and self-insured plans.
In April 2012 the IRS issued a proposed rule implementing a new fee to fund the Patient-Centered Outcomes Research Institute. The Institute’s mission is to conduct research evaluating health outcomes and clinical effectiveness of medical treatments.
For plan years ending after September 30, 2012 and before September 30, 2013, the fee will be $1.00 times the average number of enrollees. After the first year, the fee will be $2.00 times the average number of enrollees. The fee will be imposed for seven years.
Some plans, such as certain dental, vision, health FSAs, and EAPs and others are exempt.
The proposed rule explaining the fee is published in the Federal Register at http://www.gpo.gov/fdsys/pkg/FR-2012-04-17/pdf/2012-9173.pdf.
Compliance Assistance
The US DOL Compliance Assistance web page contains links to the various provisions of the Affordable Care Act regulations and guidance. This handy tool is at: http://www.dol.gov/ebsa/compliance_assistance.html.
If you have additional questions about these topics or other HR issues, contact the Trusight Research Hotline at research@trusightinc.com or call 763.253.9100 and ask for the Research department.
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