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The first year of the Patient Protection and Affordable Care Act (PPACA), enacted on March 23, 2010, involved several compliance challenges—not the least of which was keeping up with the many pieces of guidance issued by the U.S. Department of Labor, Internal Revenue Service and Department of Health and Human Services. After a year of analysis, here are some of the top issues that should be addressed by U.S. employers:
1. Understanding the big picture. If health care reform withstands the legislative, judicial and political challenges it faces, then the landscape will be substantially different by 2014. Health insurance exchanges will allow individuals to purchase health care coverage, some with subsidies. Individuals and employers will be subject to health insurance coverage mandates. It will be important for employers to understand how the exchanges work, which employees will qualify for subsidies and which individuals and employers will be subject to the health insurance coverage mandates.
2. Modeling costs post-2014.Employers should be modeling their costs under various alternatives in 2014. One alternative might be to stop providing major medical insurance. This would mean sending employees to the health insurance exchanges for coverage and paying the no-coverage penalty of $2,000 per full-time employee (assuming at least one such employee obtained a subsidy for exchange coverage). Another alternative would be to keep providing coverage. However, in that case, employers will want to consider whether they need to make changes to the cost and quality of their coverage to avoid penalties that will apply if coverage is considered unaffordable or low in value. Of course, cost is not the only factor driving health insurance coverage decisions, and employers will want to consider other factors such as competitiveness, employee productivity and morale.
3. Getting ready for new reporting and disclosure requirements.Health care reform contains a number of new reporting and disclosure requirements that will begin taking effect, including a requirement to report the value of health insurance coverage on Form W-2 and new mini-summaries of health coverage (both effective in 2012), and new cost and coverage reporting requirements (effective in 2014). Although guidance is still to come on the specifics of these requirements, employers should begin alerting their systems and administration personnel that these obligations are pending.
4. Updating plan documents and contracts.Most employers made a number of changes to their health plan documents in 2010 to comply with health care reform requirements, such as covering adult children to age 26, eliminating lifetime limits on essential benefits and notifying plan participants about grandfathered status if a plan decided to become a grandfathered plan. Employers should make sure that their plan documents and summary plan descriptions reflect their changes accurately. In addition, as employers renew contracts with service providers to benefits plans, they should consider whether the contracts require changes for health care reform, such as new claims processes, incorporating revisions to the internal process and external review, new indemnification provisions and the like.
5. Monitoring developments. The constitutionality of the individual mandate provision of health care reform continues to be challenged in courts, and courts have come to differing decisions. Experts are in widespread agreement that this issue will be resolved by the U.S. Supreme Court. The only issue is how soon that will happen. And even if the Supreme Court finds the individual mandate provision unconstitutional, the fate of the rest of the health care reform provisions is unclear. Health care reform has faced legislative challenges as well, and some changes are likely.
Finally, administrative and regulatory guidance is still expected on a number of important provisions that will affect health plans, such as the reporting and disclosure requirements mentioned above, the meaning of essential health benefits and the definition of full-time employees. Employers should watch all of these developments closely.
Maureen M. Maly is a partner with Faegre & Benson in the law firm's Minneapolis office. Her practice focuses on employee benefits with a particular expertise in welfare benefits issues. She is the editor of and a frequent contributor to the Faegre & Benson health care reform blog.
© 2011 Faegre & Benson LLP. All rights reserved. This article should not be construed as legal advice.
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