Know where you stand today
Whether you currently have coverage or will be enrolling for new coverage in 2014 under the Affordable Care Act, commonly known as Healthcare Reform, changes will impact you. Get to know the key issues and when they will take effect.
Grandfathered health plans — 2010
Grandfathered plans are those that existed on or before March 23, 2010 and continued after that date. This means the plans may be exempt from some of the requirements of the healthcare reform law. However, certain requirements apply to all plans, whether they are grandfathered or not.
Requirements for grandfathered plans include:
Rescissions prohibited except for fraud — 2010
No rescissions (meaning dropped or cancelled coverage) are permitted, except in cases of fraud or intentional misrepresentation of facts.
Small business tax credits — 2010
ACA provides tax credits to small businesses with fewer than 25 employees and average wages of less than $50,000 for their contributions to buying health insurance for employees. The tax credit is 35 percent from 2010 to 2013 and increases to 50 percent in 2014 when state insurance Exchanges become operational. A full tax credit may be available to small businesses with fewer than 10 employees and average wages of less than $25,000.
For tax years beginning in 2014 or later, there are changes to the credit:
Consumer website — 2010
HHS was required to develop a website for consumers to provide information regarding health insurance and the healthcare reform law. Explore this material at healthcare.gov (link opens in new window).
Dependent coverage to age 26 — 2010
Plans that offer dependent coverage are required to make the coverage available until a child reaches the age of 26, regardless of marital status. This rule applied to all plans in the individual market and to new employer plans. It also applied to existing grandfathered employer plans, unless the adult child has another offer of employer-based coverage (through his or her job, for example).
Beginning in 2014, children up to age 26 can stay on their parents' grandfathered employer plan even if they have another offer of coverage through an employer.
Lifetime and annual limits prohibited — 2010
Individual and group health plans may not impose lifetime limits on the dollar value of essential benefits. Annual limits will be restricted until 2014 and eliminated altogether starting in 2014. Restricted annual limits do not apply to grandfathered individual plans.
No pre-existing conditions for children — 2010
Plans may no longer impose pre-existing condition exclusions for children under 19. This does not apply to grandfathered plans.
Preventive services with no cost-sharing — 2010 (and updated in 2012)
New policies must cover the full cost of preventive care as recommended by the U.S. Preventive Services Task Force. This includes immunizations, preventive care for infants, children, and adolescents, and additional preventive care for women.
Insurance plan appeals process — 2010
There are new minimum requirements for internal and external claims appeals processes.
Patient protections — 2010
Group health plans and issuers offering group or individual health coverage are required to ensure choice of healthcare professionals and greater access to emergency services. Plans that require or provide for a primary care provider (PCP) designation must allow any in-network PCP or pediatrician accepting new patients. Plans no longer require an authorization or referral to see an Ob-Gyn. Prior authorization or increased cost-sharing for emergency services is prohibited.
Funding for health insurance Exchanges — 2010
The law provides grants to states to begin planning for the establishment of insurance Exchanges and Small Business Health Options Program (SHOP) Exchanges. These Exchanges will facilitate the purchase of insurance by individuals and small employers.
Medical loss ratio — 2011
Health plans are required to report the proportion of premium dollars spent on clinical services, quality, and other costs. Plans must provide rebates to consumers if the share of the premium spent on clinical services and quality is less than 85 percent for large-group plans and 80 percent for individual and small-group plans.
OTC drugs and spending accounts — 2011
Health savings accounts (HSAs) and flexible spending accounts (FSAs) may no longer be used to purchase over-the counter drugs unless prescribed by a doctor. Increases tax for nonqualified HSA withdrawals from 10 to 20 percent, and for Archer MSA withdrawals from 15 to 20 percent.
Preventive services with no cost sharing — 2012
In 2012, two new services were added to Humana’s new and renewing plans to be covered at full cost when provided by a network provider:
The additional benefits will not impact a group’s grandfathered status.
This provision does not apply to grandfathered plans and transitional non-grandfathered plans.
Religious employers who meet eligibility requirements such as churches, synagogues, and mosques may opt out entirely from the contraceptive coverage.
Certain nonprofit nonreligious employers, such as universities, hospitals, social service organizations and certain for-profit companies, based on religious beliefs, can opt out of contraceptive coverage via a self-certification. Insurers/TPAs must provide the coverage to members at no cost.
Summary of Benefits and Coverage (SBC) — 2012
As of September 23, 2012, group health plans and health insurance issuers must provide a Summary of Benefits and Coverage (SBC) document to applicants, policyholders or certificate holders, and enrollees. The SBC document must meet the format and content criteria of the final regulations. It must provide consumers with a clear, concise summary of their plan benefits and allow them to compare coverage across plans and/or carriers. The SBC must be provided at specified timeframes upon enrollment and at renewal.
The employer is responsible to provide the SBC to its employees. An employer offering a self-insured plan may make arrangements with the carrier providing administrative services to produce the document.
Comparative effectiveness fee — 2012
Employers sponsoring group health plans started paying $1 per participant in 2012. This fee increases in 2013 to $2 per participant. Thereafter the amount will be indexed to national health expenditures. This fee phases out by 2019. Revenue from the fee will fund research to determine the effectiveness of various types of medical treatments.
Employer reporting requirements — 2013
Employers with 250 or more W-2s must show employees the total cost of their group health benefit plan coverage on their W-2 forms starting with the 2012 tax reporting year.
Beginning on 10/1/13 employers must notify existing employees and new hires:
Additional Medicare Part A Tax on High Income Tax Payers (starting with 2013 tax year)
Excessive Compensation for Employees of Health Insurers
2013 provision: Itemized Tax Deductions for Individuals.
Flexible spending account contributions — 2013
The annual dollar limit on employee contributions to employer-sponsored healthcare FSAs rose to $2,550 in 2015, up from $2,500 in 2014. Both employer and employee may contribute to an employee's health FSA, but contributions from all sources combined must not exceed the $2,550 annual limit for 2015. This amount did not change for 2016 and remains the same. Note: This amount may adjust upwards in the future to account for inflation and can be checked here: www.irs.gov/publications/p969/ar02.html (link opens in new window)
Health insurance Exchanges — 2014
Exchanges are online marketplaces. Insurance Exchanges began, along with Small Business Health Options Program (SHOP) Exchanges. In 2014, individuals and small businesses employees can purchase health insurance on these Exchanges. States can allow large employers to participate beginning in 2017.
ICD-10 Requirements — 2014
Beginning 10/1/2014, ICD-10 provisions will be effective. It builds on and enhances the HIPAA requirements regarding standards of electronic transactions.
The updates to the standards are needed to accommodate the transition to ICD-10, the 10th revision of the International Statistical Classification of Diseases and Related Health Problems (ICD) list by the World Health Organization. It codes for diseases, signs and symptoms, abnormal findings, complaints, social circumstances, and external causes of injury or diseases.
For further information, please link to the following document: Humana ICD-10 Implementation (link opens in new window)
Individual requirement to have insurance — 2014
The law requires U.S. citizens and legal residents to have qualifying health insurance. For those without coverage (with certain exemptions), there will be a phased-in tax penalty.
Subsidies to buy insurance in state health insurance Exchanges will be available. People who do not qualify for Medicaid eligibility but who are still below 400 percent of the federal poverty level may be eligible for tax credits and cost-sharing assistance.
Premium Tax Credit Reporting for Marketplace Members — Beginning in 2014 and after
Form 1095-A is a tax form that will be sent to consumers who have been enrolled in health insurance through a state or federal Marketplace in the past year. Just like you get a W-2 from your employer, you’ll be getting a form from the Marketplace that you’ll need to prepare your Federal Income Tax return. Form 1095-A provides information that is needed to complete Form 8962, Premium Tax Credit (PTC).
If you receive your premium tax credit in advance every month: The Marketplace will send you an information statement (Form 1095-A) showing the amount of your premiums and advance tax credit payments by January 31st of the year following the year of coverage. Use this form to complete your Federal Income Tax return. If the premium tax credit computed on the return is more than the advance payments made on your behalf during the year, the difference will increase your refund or lower the amount of tax you owe. If the advance credit payments are more than the premium tax credit, the difference will increase the amount you owe and result in either a smaller refund or a balance due.
If you do not receive your premium tax credit in advance but are eligible: You will claim the full amount of the premium tax credit when you file your tax return. This will either increase your refund or lower your balance due.
If you believe that APTC is incorrect on your 1095-A form: Please contact the Exchange to voice your concern. Humana will work closely with the Exchange to ensure that everything’s accurate but you must work directly with the Exchange to correct any errors and have corrected forms mailed back to you.
For more information visit: Healthcare Law: What’s New for Individuals & Families (link opens in new window)
Essential benefits — 2014
Individual and small group plans offered inside/outside the Exchange must provide the essential benefits package. The minimum benefit package applies to individual and small group new business in 2014 and non-grandfathered existing business. It includes: ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health & substance abuse, prescription drug, rehabilitative & habilitative services/devices, lab services, preventive/wellness, disease management and pediatric services including oral & vision care.
No annual limits on coverage — 2014
Annual limits on essential health benefits are prohibited. However, this does not apply to grandfathered individual plans.
Guaranteed availability of insurance — 2014
All plans within a health insurer’s HMO, PPO and POS offerings must be made available for purchase under guaranteed availability and renewed under guaranteed renewability to anyone in the service area.
Guaranteed Issue — 2014
This provision requires health insurers to accept every individual and employer who applies for coverage regardless of the applicant’s health status or other factors.
Rating restrictions — 2014
Rating restrictions go into effect for new individual and fully insured small group plans. Insurance companies cannot base premiums on health status, claims experience or gender. Health insurance issuers may vary the premium rate charged to a specific non-grandfathered individual or small group from the rate established for that particular plan only on the following factors: family size (individual or family), geography (rating area), age (within a ratio of 3:1 for adults) and tobacco use (within a ratio of 1.5:1).
Merged markets — 2014
States are allowed to merge together individual and small group markets if the state determines it is appropriate.
Cost-sharing limits — 2014
For 2014, the out-of-pocket maximums are the same as the maximum out-of-pocket limits applicable to HSA-compatible high-deductible health plans under IRS Code and were $6,450 for single coverage and $12,900 for family coverage. For future years, the 2014 limits are increased by the premium adjustment percentage—the percentage increase in the average per capita premium for health insurance coverage. These limits impact individual, small group and large group new business in 2014 and existing non-grandfathered business. For the current information on the annual maximum out-of-pocket limit, check here: https://www.healthcare.gov/glossary/out-of-pocket-maximum-limit/ (link opens in new window)
Wellness programs — 2014
The law permits employers to offer employee rewards of up to 30 percent of the cost of coverage for participating in a wellness program and meeting certain health-related standards.
Transitional reinsurance program — 2014
A transitional reinsurance program will be established for the individual market and funded by individual and group health plan assessments (totaling $25 billion between 2014 – 2016). This program will provide payments to plans in the individual market that cover high-risk individuals.
Pre-existing conditions — 2014
Individual and group health plans can no longer impose pre-existing condition exclusions for any person of any age. This includes children under the age of 19 and does not apply to grandfathered individual plans.
Minimum Essential Coverage (MEC) Reporting — 2015
Section 6055 requires health insurers and sponsors of self-insured plans to report on this coverage to the IRS annually.
It also requires insurers and sponsors of self-insured plans to report to their MEC recipients, so the individuals can report that coverage when filing their federal taxes. The reporting to both individuals and the IRS for 2015 is due in early 2016.
The 6055 reporting requirement has two goals. It helps individuals verify that they have MEC for purposes of satisfying the Individual Shared Responsibility requirement. At the same time, it enables the IRS to crosscheck that information with insurers or self-insured plans.
Entities subject to 6055 reporting are health insurance issuers, sponsors of self-insured coverage, government sponsored programs, such as Medicaid, and providers of other arrangements designated as MEC, such as high-risk pools.
The final rule states that self-insured employers are responsible for reporting this information to the IRS. Humana will provide reporting to the IRS for fully insured groups. If a self-funded employer needs information on covered members and their coverage dates for a calendar year to meet their part of their reporting obligation, a report of covered individuals can be requested through their Humana representative.
Information required to be reported to the IRS by persons who provide minimum essential coverage:
Information required to be reported to responsible individuals:
Section 6056 reporting requires employers subject to Employer Shared Responsibility to report to the IRS information about the health coverage they provided to their employees. The IRS will use this information to determine if the employer has to pay any penalties for failing to offer coverage or failing to offer coverage that meets minimum value and is affordable. The reporting to both individuals and the IRS for 2015 is due in early 2016. Even the smaller employer (50 – 99) will need to report the first year to certify they are exempt from a full report for the first year.
Information required to be furnished to the IRS:
Information reported to the IRS with the use of indicator codes will include:
Employers also have to provide statements to employees regarding their health coverage that mirrors the information reported to the IRS — primarily so employees can use this information to help determine if they are eligible for a premium tax credit for health insurance through the Marketplace.
Additional information for sponsors of self-insured plans
To reiterate, ASO employers are accountable to report for MEC reporting (regardless of size) and employer reporting (if they meet the 50+ full time employee threshold including equivalents). That is, they are accountable for 6055 and 6056 if it applies to them. The IRS will not allow TPAs to report on their behalf.
A single, combined form for reporting is available for employers who self-insure that will handle reporting for both 6055 and 6056.
The combined form will have two sections: the top half includes the information needed for section 6056 reporting, while the bottom half includes the information needed for section 6055.
This information is only a high-level summary of certain provisions of the healthcare reform law. This information does NOT attempt to summarize all provisions of the healthcare reform law. This information is NOT and should NOT be used as legal or tax advice; it should NOT be used as a basis for decisions on how the healthcare reform law will affect you and/or your business. Should you have any questions on how the healthcare reform law (including the high level summary of certain provisions of healthcare reform) will affect you and/or your business, you should seek professional advice from attorneys or other advisors.
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