Year-end Action Items for Health Care Reform Compliance
Dannae L. Delano, Jamie M. Westbrook
Oct 22, 2013
Although the implementation of the employer mandate and reporting requirements under the Affordable Care Act (ACA) have been delayed until 2015, various provisions were not affected by the delay and will still take effect for plan years beginning on and after Jan. 1, 2014, including:
- Individual Mandate Will Be Effective in 2014: Employers struggling with the application of the ACA received great news in July 2013 with the delay of the “pay or play” penalties implementation. However, the individual mandate has not been delayed. The individual mandate will require most individuals to purchase health insurance coverage in 2014 or pay a tax penalty. Further, employees will need information regarding the affordability/minimum value of their employer health coverage to apply for premium tax credits available under the ACA exchanges. Employers should be prepared to answer basic questions and refer employees to appropriate exchanges.
- No Exclusion of Adult Children: All plans must provide adult children under age 26 coverage regardless of whether they have access to other coverage.
- Any Pre-Existing Condition Exclusion Provisions Prohibited: Group health plans will no longer be able to deny coverage to any individual on the basis of a Pre-Existing Condition (PEC). Employers should ensure they eliminate any PEC exclusions in their affected health plans. Currently, group health plans are prohibited from imposing PEC exclusions on individuals enrolled in such plans under 19 years old.
- Annual Limits on Essential Benefits No Longer Permitted: All health plans will be required to cover a comprehensive package of “essential health benefits” with no annual limits (currently you may have an annual limit of $2 million or less). Non-essential health benefits can have lower annual limits to the extent otherwise permitted by law.
- Limitation on Benefit Waiting Periods: All group health plans cannot apply waiting periods that exceed 90 days to newly eligible employees. The 90-day period is measured from date of hire. Consequently, if coverage is effective on the first of the month following the 90-day waiting period, this limitation is violated.
- New Wellness Incentive Rules for Plan Years Beginning in 2014: Wellness incentives are permitted to be increased as the statutory maximum rewards for standard-based programs have been increased. Participation-only wellness programs are not affected by this change.
- Coverage of Clinical Trials and Prohibition on Discrimination: Non-grandfathered group health plans cannot deny an individual participation in an approved clinical trial or otherwise discriminate against an individual on the basis of clinical trial participation. Coverage is required for qualified individuals participating in approved clinical trials and plans are prohibited from denying, limiting, or imposing conditions on coverage of routine patient costs for items and services furnished in connection with the trial.
- Providing Essential Health Benefits in the Small Group Market in 2014: Non-grandfathered health plans offering coverage in the individual or small group market must ensure that such coverage includes “essential health benefits.”
- Out-of-Pocket Expenses Will Be Capped: Non-grandfathered plan out-of-pocket expenses, including deductibles, copays, and coinsurance, are capped.
- Annual Deductible Maximum: Annual deductibles may not exceed $2,000 for individual coverage and $4,000 for any other coverage (i.e., family coverage).
- Out-of-Pocket Maximum: Maximum out of pocket limitations will prohibit plans from charging out of pocket limits that exceed $6,350 (individual) and $12,700 (family) coverage.
Required Year-End Health and Welfare Plan Notices
- HIPAA Privacy Notices: If you updated your Notice of HIPAA Privacy Practices on your website by Sept. 23, 2013, you must also distribute such notice to participants with open enrollment materials. If you do not have the notice posted on a benefits website, you must mail the updated notice to all participants on or before Nov. 23, 2013.
- Summary of Benefits and Coverage (SBC): SBCs must be provided to participants during open enrollment, as well as when first eligible to participate. In addition, you must provide 60 days advance notice to participants prior to the effective date of any material changes to the plan. This advance notice may be in the form of an updated SBC or separate document detailing the change.
- COBRA Notices Updated: All employers should be using the updated model COBRA Election Notice that has been provided by the DOL and includes information on exchange-based coverage.
- Pre-Existing Condition Exclusion Notices: As previously discussed, pre-existing condition exclusions are no longer allowed for 2014. Although the ACA does not impose any separate notice requirement on the elimination of pre-existing condition exclusions, employers still need to update all applicable employee-participant communications (including the plan document, summary plan description, and enrollment materials) to correctly explain the plan’s terms. Due to the elimination of pre-existing condition exclusions, HIPAA Certificate of Creditable Coverage will no longer be required.
- Exchange/Marketplace Notices: As discussed in our previous blog, employers should have provided all current employees with Exchange Notices by Oct. 1, 2013. In addition, employers must provide all new hires with the Exchange Notice within 14 days of their hire dates.
Employers should take advantage of the last months of 2013 to undertake these changes to ensure health care reform compliance. If you have any questions or concerns regarding health care reform or other employee benefits issues, please contact Dannae Delano at firstname.lastname@example.org or Jamie Westbrook at email@example.com.
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