Category Archives: Health and Welfare Benefits

As stated in a previous post to this blog, the Play or Pay mandate under the Affordable Care Act only applies to “large employers.”  A large employer for this purpose is an employer that employs on average at least 50 full-time equivalent employees in the preceding calendar year.  However, in the case of a new employer, large employer status is based on the reasonable expectation of how many full-time equivalent employees the employer will employ in the current year. 

To determine full-time equivalent employees, an employer counts every employee that is reasonably expected to work on average at least 30 hours per week, or 130 hours per month, as one full-time equivalent employee.  For every other employee, their full-time equivalent status is based on how many hours they work in a month, as compared to a 120-hour per month standard.

Takeaway:  The first step in the Play or Pay analysis for employers is to determine whether it is a large employer under the Affordable Care Act.  The analysis is only based on the number of an employer’s full-time equivalent employees.  The analysis is not based on whether the employer is a government employer, for-profit employer, or non-profit employer, as all these types of employers are potentially subject to a penalty/tax under the Play or Pay mandate of the Affordable Care Act.

This is a common question raised by employers.  Fortunately, the specific answer is fairly straightforward.  The Affordable Care Act does not require any employer to provide health insurance to its employees.

However, the Affordable Care Act does provide that generally beginning January 1, 2014, a large employer must provide substantially all of its full-time employees and their dependents the opportunity to enroll in affordable, minimum value health insurance, or the employer may be subject to a tax/penalty.  This is commonly referred to as the Employer Shared Responsibility mandate or the Play or Pay mandate under the Affordable Care Act.

Takeaway:  Even though the Affordable Care Act does not require any employer to provide health insurance to its employees, the Affordable Care Act does significantly change the analysis a company should perform in deciding whether to provide health insurance to its employees or not.  It is a complicated analysis that employees should have already started to perform, or should begin to perform well before January 1, 2014.  Future posts to MinnesotaEmployer.com will highlight important aspects of the analysis.

The Supreme Court has ruled and President Obama has been reelected to a second term.  For employers, this means there is no time like the present to begin (or continue) planning for full implementation of the Affordable Care Act.  The following are some next steps for employers to take with regard to their group health plan.

1. New Guidance – There has been very little guidance released over the last couple of months prior to the election.  But new guidance is expected regarding several key features of the Affordable Care Act.  As the new guidance is released, employers must become familiar with the guidance as quickly as possible.
2. 2013 Changes – Several new requirements become effective in 2013, including limits on flexible spending accounts, W-2-reporting requirements, new Medicare payroll tax on high income wage earners, and new notice requirements.  Employers must make sure that they are in compliance with these new requirements as soon as possible.
3. 2014 Changes – January 1, 2014 marks the effective date of the most significant new requirements under the Affordable Care Act, including the individual mandate, the employer shared-responsibility mandate, and the new health insurance exchanges.  It is not too early for employers to begin planning for these 2014 changes. 

Takeaway – While the Affordable Care Act still faces discrete legal challenges and questions remain regarding how funding will be handled at both the federal and state levels, the Affordable Care Act has survived the major challenges it has faced.  Therefore, employers should be planning for full implementation.

While most of the attention on health care reform has been on the federal government, federal regulatory agencies and federal courts over the past 2 ½ years since the Patient Protection and Affordable Care Act was passed into law in March 2010, focus has started to turn to the states.  This is because one of the most significant new features to come out of health care reform is the public exchanges, which the states are tasked with creating and maintaining.

The public exchanges are intended to serve as new marketplaces to purchase qualified health plans, so individuals can satisfy the individual mandate, and certain companies can satisfy the shared-responsibility mandate, both of which become effective in 2014.  Individuals and companies alike are beginning to evaluate their current health insurance situation, in light of the new mandates.  However, until the new public exchanges are created, it is difficult to do a complete analysis.

In addition, under a new disclosure mandate, effective March 1, 2013, employers will be required to provide notice to its employees of how the public exchanges will work.  But again, until the exchanges are created, complying with this new disclosure mandate will be challenging, to say the least.

While some states have said they will not create an exchange (thereby forcing the federal government to establish an exchange for such a state’s residents), and others have said they are just now beginning to look into creating an exchange, Governor Dayton has announced the creation of a new state agency in Minnesota, which will be responsible for creating an exchange in Minnesota.  Until now, much of the responsibility fell on the Commerce Department.  But now the new agency will be headed up by Minnesota Management and Budget Commissioner James Showalter.

Takeaway:  This is an important development for Minnesota’s health care reform efforts, as it shows a definite intent to create an exchange in Minnesota, and it provides a resource for individuals and employers as they try to learn more about how the public exchange option will work in Minnesota.  In addition, Minnesota residents and employers can check out a new website that is intended to provide the most updated information on Minnesota’s health care reform efforts.  The website can be found at www.mn.gov/health-reform.  This website is intended to provide a state resource similar to the resource that is available to keep abreast of the federal government’s health care reform efforts, at http://www.healthcare.gov/.

The speculation as to how the U.S. Supreme Court will decide in the case of the Department of Health and Human Services vs. Florida has begun.  At issue, of course, is whether the health care reform law that was enacted in 2010 is constitutional.  While many in the United States are anxiously awaiting the Supreme Court’s decision, expected later this summer, group health plan administrators are advised to keep working on provisions of the law that are currently effective, or that will become effective in the near future.

Rather than waiting on the sidelines, plan administrators should continue to work on the following:

• The Summary of Benefits and Coverage requirement is generally effective on or after September 23, 2012.

• W-2 reporting of the cost of employer provided health insurance coverage is required for 2012 Form W-2s.

• The $2,500 health flexible spending account limit becomes effective as of January 1, 2013, which affects plan years beginning after January 1, 2012.

Takeaway:  While watching the news and listening to all the coverage surrounding the debate regarding the constitutionality of the health care reform law may be interesting, group health plan administrators are advised to continue implementing its provisions, as they become effective, at least until the U.S. Supreme Court issues its opinion in this landmark case.

One of the new requirements under the Patient Protection and Affordable Care Act is that group health plan participants must receive a Summary of Benefits and Coverage (SBC).  The SBC is a concise summary (limited to four pages) of the key benefits and coverages provided through the health plan, the costs to the participant, lists of excluded services, and other significant conditions or limitations.

On February 14, 2012, final rules regarding the SBC requirement were published in the Federal Register.  Under the final rules, the SBC must be provided beginning on the first day of the first open enrollment period that begins on or after September 23, 2012.  For plans that do not have an open enrollment period, the SBC must be provided beginning on the first day of the first plan year that begins on or after September 23, 2012.

In an effort to clarify ambiguities in the final rule, on March 19, 2012, the Departments of Labor, Health and Human Services, and the Treasury (the “Departments”), released 24 new Frequently Asked Questions regarding the SBC requirement.  The FAQs provide valuable information for insurers and plan sponsors relating to the SBC requirement, including:

• During the first year of applicability, the Departments will not impose penalties on plans and issuers that are working diligently and in good faith to provide the required SBC content in an appearance that is consistent with the final regulations.
• When information relating to multiple coverage tiers is provided in one SBC, the coverage examples should be completed using the cost sharing (e.g. deductible and out-of-pocket limits) for the self-only coverage tier.
• If a group health plan contracts with a third party to distribute the SBC to participants, the plan will not be subject to any enforcement action by the Departments, even if the third-party fails to provide a timely or complete SBC, provided the plan monitors performance under the contract and takes corrective actions upon knowledge of a violation.
• An SBC may be provided electronically to both eligible individuals that are not yet enrolled, as well as to participants covered under the plan.

Takeaway:  Group health plan insurers and plan sponsors should review the newly released FAQs as they begin to prepare for the new SBC requirements.