| To date, little is known about specifics expected | | | | mandates listed previously. Too, health care |
| to come from the two departments. HHS will be | | | | reform will begin to count part-time employees as |
| the primary driver however, while DOL will | | | | well through a formula called "full-time equivalent" |
| address union and other labor issues that arise. | | | | (FTE). This could be especially troubling to |
| Healthcare reforms do address a few specific | | | | employers with fewer than 50 full-time |
| areas by which employers, large and small, can | | | | employees, but after accounting for FTE of |
| plan. We do need to remember the final outcome | | | | part-time employees they could inadvertently be |
| of the law was not to reduce costs. Rather, the | | | | counted as 50+ and subject to mandates. The |
| purpose was to increase access to health | | | | FTE formula will be clarified as time goes by, but |
| insurance. | | | | by January 1, 2014, all non-grandfathered groups |
| The immediate timeline related to all employer | | | | will be subject to these mandates. |
| sponsored health insurance plans look like this: | | | | Health care reform does not require employers to |
| -By September 23, 2010, all insurance plans must | | | | offer group insurance. Nevertheless, penalties will |
| offer dependent coverage to children until age 26, | | | | apply to 50+ employee groups (including FTE & |
| regardless of marital status, student status, or | | | | remember the common ownership rule) who do |
| employment status. | | | | not offer medical insurance. For instance, an |
| -Tightly restricted annual limits on "Essential Health | | | | employer would face a $2000 fine per employee |
| Benefits" are eliminated | | | | (31st employee and beyond) if even one |
| -Waiting periods for pre-existing conditions are | | | | employee receives a $2000 tax credit from the |
| eliminated for children under age 19 | | | | government toward health insurance through the |
| -Lifetime benefits are eliminated | | | | Exchange (to be explained in a later column) or |
| -35% tax credit (immediate for 2010) for | | | | through Medicaid. |
| employers who offer and subsidize health | | | | Employers who offer health insurance must also |
| insurance for its employees. | | | | offer a free voucher, equal to the employer's |
| Essential Health Benefits will be better defined by | | | | contribution, to all employee's whose household |
| HHS over time, but will certainly include | | | | income is less than 400% of the federal poverty |
| mandatory wellness benefits. Health plans in effect | | | | level. The employers can then purchase insurance |
| on or before March 23, are considered | | | | through the Exchange. If the Exchange is cheaper |
| "grandfathered" and thus are exempt from the | | | | than the value of the voucher, the employer is |
| following mandates. However, a change in carriers, | | | | then required to pay the difference to the |
| a "substantial" change in benefits, or a substantial | | | | employee. |
| shift in costs of premiums to employees will result | | | | On January 1, 2014, the IRS will get involved. |
| in the loss of this exemption. HHS will issue R & | | | | Employers of 50+ and not grandfathered will be |
| Rs later, further defining the parameters of | | | | required to report the value of the health |
| "substantial change". | | | | insurance on W-2's to be issued by January 2012. |
| Grandfathered plans may enjoy the luxury of | | | | Penalties will apply here as well if the reported |
| smaller premium increases over time than | | | | value is greater than $10,200 for individuals or |
| non-grandfathered plans because these new plans | | | | $27,500 for families. That is, insurers will be |
| have other, stricter requirements. | | | | assessed an excise tax on the coverage and |
| In the interim, grandfathered plans are exempt | | | | because of the MLR, that assessment will likely be |
| from: | | | | pushed on to employees as higher premiums. |
| -First dollar coverage for preventive care although | | | | If the employer's contribution is less than 60% or |
| some grandfathered plans offer this benefit. | | | | the employee's cost share of premium exceeds |
| -Non-discrimination rules are extended to insurance | | | | 9.5% of household income and an employee |
| plans. That is, management may not have a richer | | | | receives a government subsidy, then a penalty of |
| benefit plan than non-management | | | | $2,000 for each employee (31st employee and |
| -Emergency care services must be treated as | | | | beyond) is levied.. |
| "in-network" without prior authorization | | | | By March 2012, employers of 50+ and |
| -Pediatricians and OB-GYNs are considered | | | | non-grandfathered plans must provide a 4-page |
| primary care providers. | | | | pre-enrollment coverage document outlining |
| Insurance carriers will be required to abide by a | | | | benefits and exclusions to all new employees. |
| "minimum loss ratio" (MLR). This will apply to all | | | | Details will be forthcoming from HHS. |
| group insurance plans. In short, the MLR states | | | | Reading "between the lines", it would appear the |
| that insurance companies must issue refunds to | | | | government is making it difficult for employers at |
| groups if claims are less than 85% (large groups) | | | | or near 50 full-time employees to offer health |
| and 80% (small groups) of total premiums paid. | | | | insurance. Likewise, employers may be forced to |
| The reverse is also true. Small groups in particular | | | | eliminate part-time/seasonal workers and instead |
| could face excessively high premiums after one | | | | opt for overtime to regular/full-time employees to |
| particularly unfavorable year. Some employers | | | | avoid potential penalties and the possibility of |
| who provide health insurance are now faced with | | | | having to cover part-time employees on |
| some tough decisions as a result of health care | | | | insurance. |
| reform. Non-grandfathered plans are more likely | | | | Health care reform includes other mandates that |
| to see significantly higher premiums than | | | | will trigger by January 1, 2014, but are not as |
| grandfathered plans, as R & Rs clarify some of | | | | likely as the above mandates to alter an |
| the uncertainty. | | | | employer's basic business model on hiring |
| Health Care Reform included some other obscure | | | | practices, nor are they as apt to influence an |
| provisions about which employees are probably | | | | employer's decision on whether to offer insurance. |
| unaware. All non-grandfathered plans and | | | | Inevitably, many more questions will arise. As you |
| employer groups with 25 or more employees | | | | can see, the intent with health care reform is a |
| (including common ownership of 2 or more small | | | | push toward universal coverage through |
| businesses) will be subjected to a number of | | | | employers of 50+. |
| reporting requirements in addition to the | | | | |