The following table provides a timeline of effective dates for the primary healthcare reform provisions affecting employers.
Caution: PPACA is under constant review. Provisions could be adjusted, re-interpreted and even repealed in the future. This is a snapshot as of July, 2012.
2012
W-2 Reporting
W-2 reporting of aggregate cost of employer-sponsored health plan coverage. Certain stand-alone plans are exempt.
- Optional for 2011 taxable year.
- Generally applies beginning with 2012 W-2 forms (furnished in January 2013).
- Not required through 2012 for employers that file fewer than 250 W-2 forms in 2011.
Summary of Benefits and Coverage (SBC)
Must be provided to plan participants prior to enrollment and upon request.
A new SBC or Summary of Material Modifications must be provided to plan participants at least 60 days prior to the effective date of a material modification to the plan.
- The final regulations require employers to distribute the SBC beginning on or after September 23, 2012.
- For calendar year plans, this means that SBCs will be required for the first time in conjunction with 2013 open enrollment materials during the fall of 2012.
- The SBC must be provided as part of any written application materials that are distributed by the plan for enrollment. If the plan does not distribute enrollment materials, the SBC must be distributed no later than the first date the participant
and any beneficiaries are eligible to enroll in coverage.
Medical Loss Ratio (MLR)
If a health insurance issuer's Medical Loss Ratio (MLR) fails to meet minimum requirements (generally, 85% in the large group market and 80% in the small group market), the issuer must provide an annual rebate to enrollees. The issuer can send the rebate directly to the
enrollees or can make arrangements with the employer to distribute the rebate and the accompanying notice.
- The first report to HHS for calendar-year 2011 is due by June 1, 2012.
- Issuers must make the first round of rebates by August 2012 based on their 2011 MLR.
Comparative Effectiveness Research Fee
Fees of $1 to $2 per plan participant (not just per employee) used to fund effectiveness research.
The fee is paid by the insurer or sponsor of a self-funded group health plan. The fee is indexed for increases in per capita national health expenditures beginning after September 20, 2014.
- For policy or plan years ending after Sept. 30, 2012.
- If the policy or employer plan is a calendar year plan, the first fee would apply for the 2012 calendar year. The fee increases to $2 per member per year for policy years ending after Sept. 30, 2013. At this time, the fee does not apply to policy years
ending after Sept. 30, 2019.
2013
FSA Salary Reductions
$2,500 cap on annual FSA salary reductions (employee contributions) offered under cafeteria plans. The $2,500 amount is indexed for inflation after 2013. Employer contributions are not included under the cap. Rule does not apply to dependent care FSA.
- Amend cafeteria plan documents and SPDs as needed and notify participants of change effective no later than January 1, 2013.
Notice About the Health Benefit Exchange
Provide new hires and current employees with a written notice that also includes the consequences of dropping employer provided coverage.
- The notice requirement is generally effective for employers beginning on March 1, 2013.
Elimination of Retiree Drug Subsidy Deduction
Employers that receive a federal subsidy for providing retiree prescription drug coverage will no longer be able to take a deduction for those retiree drug expenses as of 2013.
- Although employers will not face the higher tax liability until 2013, under financial accounting rules, employers must include the present value of the future taxes as a current liability charged against earnings.
2014
Employer Play or Pay
- January 1, 2014.
- Employers with 50 or more full-time employees (or full-time equivalents) are liable for a penalty tax if "affordable" coverage is not offered and an employee receives a federal subsidy through an Exchange.
No Annual Dollar Limits on Essential Health Benefits
- Plan years beginning on or after January 1, 2014.
No Preexisting Condition Exclusions
- Plan years beginning on or after January 1, 2014.
Maximum 90-Day Limitation on Waiting Periods
- Plan years beginning on or after January 1, 2014.
Tax on Plans to Fund Temporary Reinsurance Program
- January 1, 2014.
- States must establish transitional reinsurance programs to help stabilize premiums for individual market coverage from 2014 - 2016. Plans and insurers will be taxed.
Wellness Rewards
- January 1, 2014.
- Employers will be permitted to vary premiums up to 30% (possibly increasing to 50%) for participation in wellness programs.
Exchanges
- States selecting to operate an Exchange must establish them by January 1, 2014.
- The Federal government will set up and operate an Exchange in those States that choose not to.
- Between 2014 -2016, only individuals and small group employers with up to 100 employees are eligible to participate in the Exchanges.
- Until the year 2016, states can limit the small groups to firms with 50 or fewer employees.
- Exchange products must provide guaranteed availability of insurance for individuals and small groups.
Federal Subsidies
- January 1, 2014.
- Premium assistance tax credits and cost-sharing subsidies become available for those eligible through the Exchanges.
Coverage of Clinical Trials
- Plan years beginning on or after January 1, 2014.
Individual Mandate
- January 1, 2014.
2015
Employer Reporting
- First information returns due January 31, 2015 (for coverage provided on or after January 1, 2014). Employers with 50 or more full-time employees report names of workers covered under the plan and other plan information to the IRS and the individual.
Plan and Insurer Reporting
- First information returns due January 31, 2015 (for coverage provided on or after January 1, 2014). Sponsors of self-funded plans and health insurers report individual coverage dates, the portion of the premium the individual must pay and more.
Exchanges
- Beginning January 1, 2015, state-based exchanges must be self-sustaining. Exchanges may charge assessments or user fees.
2016
Exchanges
- All exchanges must be open to employers with up to 100 employees. Until the year 2016, states can limit the small group market to firms with 50 or fewer employees.
2017
Exchanges
- Beginning in 2017, states may elect to allow large group plans (100 or more) to be sold in the Exchanges.
2018
Tax on High-Cost Plans
- An excise tax of 40% will be imposed on employer-sponsored health benefits that exceed the value of $10,200 for self-only coverage and $27,500 for family coverage.
Effective Dates TBD
Automatic Enrollment
- IRS Notice 2012-17 states that guidance on automatic enrollment will not be ready to take effect by 2014. The compliance date will be addressed in future guidance.
Nondiscrimination Rules for Insured Plans
- Effective date depends on future guidance.
Quality Care Reporting
- Effective date depends on future guidance.
2011
OTC Drugs
OTC drugs cannot be reimbursed from an FSA, HSA, HRA or Archer MSA unless prescribed by a doctor for taxable years on or after January 1, 2011.
- Amend Plan documents and SPDs as needed and notify participants of change effective no later than January 1, 2011.
Penalty Tax Increase
HSA/Archer MSA penalty tax increase to 20% for nonmedical distributions made after December 31, 2010.
- No notice or disclosure required by employer since rule
applies to employees' individual accounts.
Simple Cafeteria Plans
Small employers may establish simple cafeteria plans that provide a safe harbor from nondiscrimination rules if minimum employer contributions are made for years beginning on or after January 1, 2011.
- Review rules for establishing simple cafeteria plan to determine if employer will qualify, adjust eligibility and benefits and amend plan documentation prior to first day of plan year.
Small Business Wellness Grants
Small business wellness grants established to create comprehensive workplace wellness programs for employers who did not have a wellness program in place on March 23, 2010.
- Available to eligible small employers beginning in 2011 taxable year.
2010
Dependent Coverage
Provide dependent coverage for children under age 26 and eliminate most dependent eligibility criteria (limited exception for grandfathered plans). See below for information on Tax-Free Coverage to Children Under Age 27. This special enrollment (and notice requirement) is a one-time event and does not need to be repeated in subsequent plan
years.
- Notice of Special Enrollment Opportunity may be included with other enrollment materials provided that it is prominent, and may be provided to an employee on behalf of a dependent.
Prohibition of Lifetime Limits
Benefits that are not essential may have lifetime limits (essential health benefits will be defined in future guidance, although HHS has released a bulletin and FAQs with additional information; good faith interpretation of essential health benefits is permitted until final
guidance issued).This special enrollment (and notice requirement) is a one-time event and does not need to be repeated in subsequent plan years.
- Notice that lifetime limit no longer applies and special enrollment opportunity provided to any individual who has lost coverage because he or she reached a lifetime limit on
benefits - may be included with other enrollment materials provided that it is prominent, and may be provided to an employee on behalf of his or her dependent.
Restriction of Annual Limits
Restriction of annual limits on essential benefits, with limits eliminated entirely by 2014. Benefits that are not essential may have annual limits (essential health benefits will be defined in future guidance, although HHS has released a bulletin and FAQs with additional
information; good faith interpretation of essential health benefits is permitted until final guidance issued).
- Amend Summary Plan Description (SPD) and plan documents as needed.
Prohibition of Preexisting Conditions Exclusion
Prohibition of preexisting conditions exclusion for enrollees under age 19 (expands to all enrollees in 2014).
- Amend SPD and plan documents as needed.
Prohibition Against Rescission of Coverage
Prohibition against rescission of coverage except in cases of fraud or intentional misrepresentation of material fact where prohibited in plan documents (rescission is a retroactive cancellation of coverage; this prohibition does not apply to prospective coverage terminations).
- In order to rescind coverage, plans and insurers must provide at least 30 days advance written notice to each participant who would be affected before coverage may be retroactively rescinded.
Grandfathered Plans
In order for a grandfathered plan to qualify as a grandfathered plan, employers must maintain their plan according to established requirements.
- For any plan or benefit option maintaining grandfathered plan status, plan must include Disclosure Statement in all plan materials (including the SPD, insurance certificate, and any other materials describing plan benefits) distributed to participants.
Preventive Services
Required coverage of certain preventive health services without cost sharing.
- Amend SPD and plan documents as needed.
Patient Protections
Allowing participants to designate any participating in-network PCP or pediatrician as primary care provider, access to OB/GYN care without requiring referral, and coverage of emergency services without prior authorization and as though the ER provider is in-network for true emergencies.
- For plans that require the designation of primary care providers or referrals from primary care providers to seek specialty care such as OB/GYN services. The notice must be included whenever a SPD or other similar description of benefits is provided to a participant and no later than the first day of the first plan year beginning or after September 23, 2010.
Claims Appeals Process
On March 18, 2011, the DOL issued Technical Release 2011-01, which extended the non-enforcement policy applicable to three of the four standards specified in T.R. 2010-02 until plan years beginning on or after January 1, 2012.
- Amend SPD and plan documents as needed. Plans must also follow new notice, disclosure, and procedural requirements for adverse benefit determinations and appeals.
Fully Insured Plans
Fully-insured plans must comply with IRC Section 105(h) nondiscrimination rules that previously only applied to self-funded plans, including rules that prohibit discrimination in favor of highly-compensated individuals in relation to eligibility to participate and
benefits provided. Enforcement has been delayed until issuance of further guidance.
- Review eligibility criteria, waiting periods, and other benefits provisions to ensure plan does not violate nondiscrimination rules; amend criteria as necessary and update SPD and Plan documents to reflect any changes.
Tax Free Coverage to Children
Tax-free coverage to children under age 27 so that the age limit, residency, support, and other tests described in Code Section 152(c) do not apply with respect to such a child for determining the tax exclusion.
- March 30, 2010; if implemented in 2010, cafeteria plan document must be amended on or before 12/31/10; implementing change on or after 1/1/11 requires adoption of
cafeteria amendment prior to allowing favorable tax treatment.
Early Retiree Reinsurance Program
Eligible plan sponsors for certain claims incurred by early retirees offered coverage under an employer-sponsored group health plan. Applications for ERRP certification will no longer be accepted after May 5, 2011.
- Eligible claims incurred on or after June 1, 2010 can be submitted for reimbursement after an employer applies and is certified to participate in the program; applications were accepted beginning June 29, 2010.
Small Business Health Care Tax Credit
Limited (35% for most employers) small business health care tax credit to small employers to provide health insurance and contribute at least 50% toward the cost of coverage. Credit amounts increase in 2014.
- After publication of implementing regulations by the Department of Health and Human Services or governing federal agency.
Whistleblower & Retaliation Protections
To encourage employees to report fraud or abuse in the delivery of health care.
- March 23, 2010.
