Archive for the ‘Health Care Reform’ Category

Health Care Reform: HCR includes Form W-2 Reporting Requirement

Thursday, November 18th, 2010

Health care reform requires employers to calculate and report aggregate cost of applicable employer-sponsored health insurance coverage on employees’ Form W-2s. Although the new rule applies for employees’ tax years beginning after Dec 31, 2010., payroll systems need to be updated for this change by January 2011. This deadline is imposed because employees are entitled to request their Form W-2 early if they terminate employment during the year.

As a result of this requirement, most Form W-2s for tax year 2011 will be issued in January 2012. Form W-2s reflecting the new health insurance information must be available no later than Feb. 1, 2011, in the event that an employee requests one.

Plans for which coverage costs must be reported under the new requirement include:

  • Medical Plans.
  • Prescription drug plans.
  • Executive physicals.
  • On-site clinics if they provide more than de minimus care.
  • Medicare supplemental policies.
  • Employee assistance programs.

Coverage under dental and vision plans is included unless they are “stand-alone” plans. However, the cost of coverage under health flexible spending accounts, health savings accounts and specific disease or hospital/fixed indemnity plans is excluded from the reporting requirement.

If your business has questions/concerns about the new reporting requirements, or if you are looking for some alternative solutions to directly providing insurance coverage and benefits to your current employees, then contact Daytona Employment at 386-253-3333 to see how we can help.

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Health Care Reform: Year by Year

Wednesday, November 10th, 2010

Daytona Employmenthas received some excellent information from our strategic partners at Administrative Concepts about the year-by-year changes that business owners can expect from the recent Health Care Reform bill. While this information is NOT complete, it is a good indicator of some of the changes/issues that you will face as a business owner/HR director. Hope this helps!

2010:

Individuals –

  • Lifetime Limits: Group Health Plans prohibited from placing lifetime dollar limits on essential health benefits
  • Annual Limits: For plan years beginning on or after 9-23-2010 but before 9-23-2011, group health plans are prohibited from imposing annual dollar limits on essential health benefits >$750k
  • Pre-Exisiting Condition Exclusion for Children:Group Health Plans may not impose pre-existing condition exclusions for children <19 years of age
  • Coverage for Adult Children:Group Health Plans that provide dependant coverage are required to extend coverage to adult children up to age 26 with no conditions on dependency. A 30-day special enrollment period is required for adult children who previously became ineligible due to age.

Employers –

  • Non-discrimination Rules Extended to Insured Plans:Fully insured health plans may not discriminate in favor of highly compensated employees. All benefits provided to highly compensated employees must be provided to all other plan participants.
  • Small Business Tax Credit:
    • They must have <25 FT employees for the tax year
    • Average annual wages must be <$50k per FT employee
    • Employer must pay the premiums under a qualifying arrangement (not less than 50% of the premium costs)
    • Firms with 25+ employees or average wages of $50k and above are NOT eligible
    • Tax-Exempt organizations can be a qualified employer, with qualifiers
    • The maximum credit for a qualified employer (other than tax-exempt employer) for tax years 2010 through 2013 is 35% of employer’s premium expenses. For tax years 2014+, the maximum tax credit is 50% of employer’s premium expenses.
    • Credit is reduced if the number of FT employees >10 or if the average wages exceed $25k (The credit may be reduced to zero for some employers with <25 FT employees with an annual wage <$50k)
  • Preventative Care:Employers may not impose cost sharing for preventative care, meaning the employer must pay the full cost of preventative care; immunizations, breast cancer screening, blood pressure screenings, cholesterol testing, Colonoscopies, diet counseling and other services as recommended by the U.S. Preventative Services Task Force

2011:

Individuals –

  • No Reimbursement for OTC Drugs:Flex Spending Account and other similar programs (such as HSA’s and/or HRA’s) may NOT reimburse non-prescribed over-the-counter (OTC) drugs purchased on or after 1-1-2011.
  • Doughnut Hole Medicare Beneficiaries:Those individuals who fit into this category receive 50% discount on brand name prescription drugs
  • High Income Seniors: Wealthy Seniors ($85k to $170k) begin paying higher Part D premiums. Wage parameters are NOT indexed for inflation.
  • HSA Distributions:  The tax on distributions for a HSA that are NOT used for qualified medical expenses increases from 10% to 20%.

Employers:

  • Simple Cafeteria Plans: Small Employers (<100 lives) allowed to adopt SIMPLE Cafeteria Plans
  • Grants: There will be grants to small employers that establish wellness programs (guidelines yet to be established)
  • Enrollee Tax:$2 per enrollee tax on all private health insurance policies (including self-insured plans)
  • W-2 Reporting: Effective for the 2011 plan year (W-2′s issued in 1-2012), employers are responsible for reporting the total cost of medical benefits provided on employee’s W-2 forms.
  •  Long Term Care: All employers required to enroll employees in a national public LTC program, unless the employee opts out.

For more information about the changes also outlined for 2012 and beyond, visit the U.S. Government’s site: www.healthreform.gov or  contact Daytona Employment at 386-253-3333 today to schedule an informative appointment.

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SHRM: New Frequently Asked Questions on Health Care Reform Released

Tuesday, October 26th, 2010

Original Post: Society for Human Resource Managers (SHRM) Author: Allen Smith, J.D., is SHRM’s manager of workplace law content

On Sept. 20, 2010, the U.S. Departments of Labor (DOL), Health and Human Services (HHS) and Treasury issued new frequently asked questions on the Patient Protection and Affordable Care Act and grandfathered health plans, internal appeals and external review, coverage of children, out-of-network emergency services and highly compensated employees.

Grandfathered Health Plans

Some issuers commented that they do not always have the information needed to know whether or when an employer plan sponsor changes its rate of contribution toward the cost of group health plan coverage.

One of the frequently asked questions noted that the interim final regulations generally provide that a group health plan or health insurance coverage will stop being a grandfathered health plan if the employer decreases its contribution rate by more than 5 percentage points below the contribution rate on March 23, 2010. 

What steps should issuers and plan sponsors take to communicate regarding changes to the plan sponsor’s contribution rate? The departments have determined that until the issuance of final regulations, they will not treat an insured group health plan that is grandfathered as having ceased to be a grandfathered plan based on a change in the employer contribution rate if the employer plan sponsor and issuer take the following steps:

Upon renewal, an issuer requires a plan sponsor to make a representation regarding its contribution rate for the plan year covered by the renewal, as well as its contribution rate on March 23, 2010.

The issuer’s policies, certificates or contracts of insurance disclose prominently that plan sponsors are required to notify the issuer if the contribution rate changes at any point during the plan year.

For policies renewed prior to Jan. 1, 2011, issuers should take these steps no later than Jan. 1, 2011. This relief will no longer apply as of the earlier of the first date on which the issuer knows that there has been at least a 5-percentage-point reduction or the first date on which the plan no longer qualifies for grandfathered status without regard to the 5-percentage-point reduction.

Another question asked whether the departments will change the current rules so that a grandfathered group health plan that changes carriers does not relinquish its status as a grandfathered health plan.

The departments expect that soon they will address the circumstances where grandfathered group health plans may change carriers without relinquishing their status as grandfathered health plans, the agencies stated.

Internal Appeals and External Review

What if a plan already provided an external review process before the reform law was enacted? Could the existing external review process be deemed to comply with Public Health Service Act Section 2719(b)?

If a plan is grandfathered, the new external review provisions do not apply, the agencies answered. But if a plan is not grandfathered and is insured, the departments have provided transitional relief under which plans can use existing state external processes in one of the states in which they operate to comply.

If a plan is not grandfathered and is self-insured, there is a safe harbor as outlined in Technical Release 2010-01. If the plan complies with one of the methods set forth in the release, the Department of Labor and the Internal Revenue Service (IRS) will not take any enforcement action with respect to Public Health Service Act Section 2719(b) during the transition period.

Coverage of Children

A plan or issuer does not fail to satisfy the requirements of Public Health Service Act Section 2714 because the plan limits health coverage for children until the child turns 26 to those children who are described in Section 152(f)(1) of the Code, another question and answer states. Section 152(f)(1) defines children to include only sons, daughters, stepchildren, adopted children and foster children. For an individual not described in Code Section 152(f), such as a grandchild or niece, a plan may impose additional conditions on eligibility for health coverage, such as a condition that the individual be a dependent for income tax purposes.

Out-of-Network Emergency Services

Another question noted that Section 2719A of the Public Health Service Act states that if a group health plan or health insurance coverage provides any benefits for emergency services, the plan or issuer must cover emergency services without regard to whether a particular health care provider is an in-network provider and generally cannot impose any copayment or coinsurance that is greater than what would be imposed if services were provided in network. But the statute does not require plans or issuers to cover amounts that out-of-network providers may “balance bill.” Accordingly, the interim final regulations under Section 2719A set forth minimum payment standards to ensure that a plan or issuer does not pay an unreasonably low amount to an out-of-network emergency service provider who, in turn, could balance bill the patient.

Are the minimum payment standards intended to apply where state law prohibits balance billing, one question asked. No, the departments answered, saying that the minimum payment standards were developed to protect patients from being financially penalized for obtaining emergency services on an out-of-network basis. If a state law prohibits balance billing, plans and issuers do not have to satisfy the minimum payments set forth in the regulations.

Highly Compensated Individuals

Another question asked whether the departments plan to issue any guidance on Public Health Service Act Section 2716, which prohibits discrimination in favor of highly compensated individuals in insured group health plans.

Yes, the departments said, noting that on Sept. 20, 2010, the IRS released Notice 2010-63, to be published in Internal Revenue Bulletin 2010-41, Oct. 12, 2010. The notice provides that an insured group health plan that fails to comply with the nondiscrimination requirements of Code Section 105(h) pursuant to Public Health Service Act Section 2716 is subject to an excise tax of $100 per day per individual discriminated against for each day the plan does not comply. Other remedies include a civil action to enjoin a noncompliant act or for equitable relief under Part 7 of the Employee Retirement Income Security Act and civil penalties of $100 per day per individual discriminated against for each day the plan does not comply.

The IRS invited comment on what additional guidance relating to the application of Section 105(h) would be helpful for insured group health plans. Comments are due Nov. 4, 2010, and may be sent to Comments@irscounsel.treas.gov with “Notice 2010-63” in the subject line.

Allen Smith, J.D., is SHRM’s manager of workplace law content.

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