Resources

The ACA put in place comprehensive health coverage reforms with effective dates spread out over a period of four years and beyond. Some of ACA’s reforms are already in effect for employers and their group health plans, such as the Form W-2 reporting requirement for large employers and the requirement for non-grandfathered health plans to cover certain preventive care services without cost-sharing.

Many of the key reforms will become effective in 2014, including provisions for health plan design changes, increased wellness program incentives, a new reinsurance fee, the employer “pay or play” mandate and additional reporting requirements. To prepare for this next phase of reforms and deadlines, click here to review our Compliance Checklist.

The ACA put in place comprehensive health coverage reforms with effective dates spread out over a period of four years and beyond. Some of ACA’s reforms are already in effect for employers and their group health plans, such as the Form W-2 reporting requirement for large employers and the requirement for non-grandfathered health plans to cover certain preventive care services without cost-sharing.

Many of the key reforms will become effective in 2014, including provisions for health plan design changes, increased wellness program incentives, a new reinsurance fee, the employer “pay or play” mandate and additional reporting requirements. To prepare for this next phase of reforms and deadlines, click here to review our Compliance Checklist.

The ACA put in place comprehensive health coverage reforms with effective dates spread out over a period of four years and beyond. Some of ACA’s reforms are already in effect for employers and their group health plans, such as the Form W-2 reporting requirement for large employers and the requirement for non-grandfathered health plans to cover certain preventive care services without cost-sharing.

Many of the key reforms will become effective in 2014, including provisions for health plan design changes, increased wellness program incentives, a new reinsurance fee, the employer “pay or play” mandate and additional reporting requirements. To prepare for this next phase of reforms and deadlines, click here to review our Compliance Checklist.

The Affordable Care Act contains provisions to create the Patient-Centered Outcomes Research Institute (PCORI), which will promote and disseminate research to help individuals and their health care providers evaluate and compare health outcomes. Based on the ending date of your plan year, employers sponsoring group health plans must begin paying $1 per participant for their 2012 plan year on either July 31 of 2013 or July 31, 2014 and pay it using IRS Form 720. This fee is called the Comparative Effectiveness Research (CER) Fee and will increase to $2 per participant for the 2013 plan year, then to an amount indexed to national health expenditures thereafter. The regulations from the IRS apply to plan years ending on or after October 1, 2012 and before October 1, 2019.

Beginning in January of 2014 (and continuing for 2015 and 2016), employers and other sponsors of self-funded health plans, as well as insurance companies offering insured health plan products, are subject to the Affordable Care Act’s transitional Reinsurance Fee. This fee is designed to fund reinsurance payments to health insurance issuers that cover high-risk individuals in the individual market (on and off the Exchange) for at least three years, beginning in 2014. The transitional reinsurance payments are intended to stabilize insurance premiums in the individual market during 2014, 2015, and 2016 as consumers and insurers become for comfortable with the state-based health insurance exchanges. The transitional reinsurance fee applies to grandfathered and non-grandfathered health plans, as well as to retiree health coverage (unless it is secondary to Medicare or qualifies for another exception).

Contributions to the reinsurance program are only required for plans that provide major medical coverage. Major medical coverage is coverage for a broad range of services and treatments, including diagnostic and preventive services, as well as medical and surgical conditions in various settings, such as inpatient, outpatient and emergency room settings. According to the proposed regulations, health FSA coverage is not major medical coverage due to ACA’s $2,500 annual limit on salary deferrals to a health FSA.

Coverage that consists solely of excepted benefits under HIPAA is not subject to the reinsurance program. This includes, for example, stand-alone dental and vision plans, accident-only coverage, disability income coverage, liability insurance, workers’ compensation coverage, credit-only insurance or coverage for on-site medical clinics. Thus, issuers and plan sponsors will not be required to pay fees for these types of plans.

In addition, the following plans and coverage would be excluded from reinsurance fees under the proposed regulations:

• Health reimbursement arrangements (HRAs) that are integrated with major medical coverage (although reinsurance fees would be required for the group health plan providing major medical coverage);
• Health savings accounts (HSAs) (although reinsurance fees would be required for an employer-sponsored high-deductible health plan);
• Health flexible spending accounts (FSAs);
• Employee assistance plans, wellness programs and disease management plans that provide ancillary benefits and not major medical coverage; and
• Stop-loss and indemnity reinsurance policies.

Also, the proposed regulations would provide that fees are only required for individuals with Medicare coverage when the employer-provided group health coverage is the primary payer and Medicare is the secondary payer. If the group health plan is the secondary payer, individuals with Medicare coverage would not be counted for the reinsurance fees.

The reinsurance program’s fees will be based on a national contribution rate, which HHS will announce annually. For 2014, HHS proposes a national contribution rate of $5.25 per month ($63 per year).

The proposed regulations provide that an issuer’s or plan sponsor’s reinsurance fee would be calculated by multiplying the average number of covered lives (employees and their dependents) during the benefit year for all of the entity’s plans and coverage that must pay contributions, by the national contribution rate for the benefit year. Thus, the annual contribution for a group health plan with 150 covered lives would be $9,450 per year (150 x $63 = $9,450).

The proposed regulations include a variety of methods for issuers and plan sponsors to determine the average number of covered lives under a health plan. These methods include a snapshot method, an actual count method and a method based on using data from insurance forms or the Form 5500.

Also, states may elect to collect additional contributions on top of the federal contribution rate to cover administrative expenses or additional reinsurance payments. The proposed regulations note that neither ACA nor the regulations give a state the authority to collect additional contributions from self-insured plans covered by ERISA.

The Affordable Care Act established new reporting requirements for the reporting of employer-provided healthcare coverage on Form W-2. Beginning with the Form W-2 provided in January 2013 (for calendar year 2012, employers who file 250 or more W-2’s and are providing “applicable employer-sponsored coverage” under a group health plan are subject to a new reporting requirement. Reporting the cost of health care coverage on the Form W-2 does not mean that the coverage is taxable. The amount reported does not affect tax liability, and the value of the employer’s excludable contribution to health coverage continues to be excludable from an employee’s income. The reporting requirement is for informational purposes only and will provide employees with useful and comparable consumer information regarding the cost of their health care coverage. The value of the health care coverage will be reported in Box 12 of the Form W-2 using Code DD to identify the amount. This amount should include both the portion paid by the employer and the portion paid by the employee. Employers are not required to issue a Form W-2 to retirees or any other former employees to whom the employer does not otherwise issue a Form W-2. This requirement is optional for employers who issue less than 250 W-2’s annually.

The Affordable Care Act contains provisions to create the Patient-Centered Outcomes Research Institute (PCORI), which will promote and disseminate research to help individuals and their health care providers evaluate and compare health outcomes. Based on the ending date of your plan year, employers sponsoring group health plans must begin paying $1 per participant for their 2012 plan year on either July 31 of 2013 or July 31, 2014 and pay it using IRS Form 720. This fee is called the Comparative Effectiveness Research (CER) Fee and will increase to $2 per participant for the 2013 plan year, then to an amount indexed to national health expenditures thereafter. The regulations from the IRS apply to plan years ending on or after October 1, 2012 and before October 1, 2019.

Beginning in January of 2014 (and continuing for 2015 and 2016), employers and other sponsors of self-funded health plans, as well as insurance companies offering insured health plan products, are subject to the Affordable Care Act’s transitional Reinsurance Fee. This fee is designed to fund reinsurance payments to health insurance issuers that cover high-risk individuals in the individual market (on and off the Exchange) for at least three years, beginning in 2014. The transitional reinsurance payments are intended to stabilize insurance premiums in the individual market during 2014, 2015, and 2016 as consumers and insurers become for comfortable with the state-based health insurance exchanges. The transitional reinsurance fee applies to grandfathered and non-grandfathered health plans, as well as to retiree health coverage (unless it is secondary to Medicare or qualifies for another exception).

Contributions to the reinsurance program are only required for plans that provide major medical coverage. Major medical coverage is coverage for a broad range of services and treatments, including diagnostic and preventive services, as well as medical and surgical conditions in various settings, such as inpatient, outpatient and emergency room settings. According to the proposed regulations, health FSA coverage is not major medical coverage due to ACA’s $2,500 annual limit on salary deferrals to a health FSA.

Coverage that consists solely of excepted benefits under HIPAA is not subject to the reinsurance program. This includes, for example, stand-alone dental and vision plans, accident-only coverage, disability income coverage, liability insurance, workers’ compensation coverage, credit-only insurance or coverage for on-site medical clinics. Thus, issuers and plan sponsors will not be required to pay fees for these types of plans.

In addition, the following plans and coverage would be excluded from reinsurance fees under the proposed regulations:

• Health reimbursement arrangements (HRAs) that are integrated with major medical coverage (although reinsurance fees would be required for the group health plan providing major medical coverage);
• Health savings accounts (HSAs) (although reinsurance fees would be required for an employer-sponsored high-deductible health plan);
• Health flexible spending accounts (FSAs);
• Employee assistance plans, wellness programs and disease management plans that provide ancillary benefits and not major medical coverage; and
• Stop-loss and indemnity reinsurance policies.

Also, the proposed regulations would provide that fees are only required for individuals with Medicare coverage when the employer-provided group health coverage is the primary payer and Medicare is the secondary payer. If the group health plan is the secondary payer, individuals with Medicare coverage would not be counted for the reinsurance fees.

The reinsurance program’s fees will be based on a national contribution rate, which HHS will announce annually. For 2014, HHS proposes a national contribution rate of $5.25 per month ($63 per year).

The proposed regulations provide that an issuer’s or plan sponsor’s reinsurance fee would be calculated by multiplying the average number of covered lives (employees and their dependents) during the benefit year for all of the entity’s plans and coverage that must pay contributions, by the national contribution rate for the benefit year. Thus, the annual contribution for a group health plan with 150 covered lives would be $9,450 per year (150 x $63 = $9,450).

The proposed regulations include a variety of methods for issuers and plan sponsors to determine the average number of covered lives under a health plan. These methods include a snapshot method, an actual count method and a method based on using data from insurance forms or the Form 5500.

Also, states may elect to collect additional contributions on top of the federal contribution rate to cover administrative expenses or additional reinsurance payments. The proposed regulations note that neither ACA nor the regulations give a state the authority to collect additional contributions from self-insured plans covered by ERISA.

The Affordable Care Act established new reporting requirements for the reporting of employer-provided healthcare coverage on Form W-2. Beginning with the Form W-2 provided in January 2013 (for calendar year 2012, employers who file 250 or more W-2’s and are providing “applicable employer-sponsored coverage” under a group health plan are subject to a new reporting requirement. Reporting the cost of health care coverage on the Form W-2 does not mean that the coverage is taxable. The amount reported does not affect tax liability, and the value of the employer’s excludable contribution to health coverage continues to be excludable from an employee’s income. The reporting requirement is for informational purposes only and will provide employees with useful and comparable consumer information regarding the cost of their health care coverage. The value of the health care coverage will be reported in Box 12 of the Form W-2 using Code DD to identify the amount. This amount should include both the portion paid by the employer and the portion paid by the employee. Employers are not required to issue a Form W-2 to retirees or any other former employees to whom the employer does not otherwise issue a Form W-2. This requirement is optional for employers who issue less than 250 W-2’s annually.

The Affordable Care Act established new reporting requirements for the reporting of employer-provided healthcare coverage on Form W-2. Beginning with the Form W-2 provided in January 2013 (for calendar year 2012, employers who file 250 or more W-2’s and are providing “applicable employer-sponsored coverage” under a group health plan are subject to a new reporting requirement. Reporting the cost of health care coverage on the Form W-2 does not mean that the coverage is taxable. The amount reported does not affect tax liability, and the value of the employer’s excludable contribution to health coverage continues to be excludable from an employee’s income. The reporting requirement is for informational purposes only and will provide employees with useful and comparable consumer information regarding the cost of their health care coverage. The value of the health care coverage will be reported in Box 12 of the Form W-2 using Code DD to identify the amount. This amount should include both the portion paid by the employer and the portion paid by the employee. Employers are not required to issue a Form W-2 to retirees or any other former employees to whom the employer does not otherwise issue a Form W-2. This requirement is optional for employers who issue less than 250 W-2’s annually.