Federal Healthcare Reform – 2012 Requirements
Posted on January 19, 2012
In October 2011, HNE provided the information below to HNE Employer Groups. It has since come to our attention that we may not have provided this information to all of our Brokers, as is our standard practice. We apologize for this oversight on our part. HNE has updated the previous letter to reflect the delayed implementation for the Summary of Benefits and Coverage.
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RE: Federal Healthcare Reform – 2012 Requirements
As your business partner, HNE is committed to keeping you informed of changes to the healthcare industry, particularly those which could have an impact on your business. This letter describes three new provisions of the federal healthcare reform law that may impact your group health plan and also provides an update regarding the delayed effective date for Employer W-2 reporting.
- Comparative Effectiveness Research Fees
- Summary of Benefits and Coverage
- Preventive Services for Women
- W-2 Reporting (Update)
Comparative Effectiveness Research Fees
The Treasury Department and the Internal Revenue Service (IRS) issued Notice 2011-35 (http://www.irs.gov/pub/irs-drop/n-11-35.pdf), as “potential guidance” that the IRS expects to propose, and requested public comments on a new tax added by the Affordable Care Act: “comparative effectiveness research fees”. There are a number of open questions and items that require clarification. The IRS will issue implementing rules at a later date.
These fees will be paid by carriers and by plan sponsors of self-insured group health plans. This essentially is a new tax on both insured and self-insured plans. In the first year it applies, the fee will amount to $1 multiplied by the average number of lives covered under the plan (including dependents). In subsequent years, the multiplier is $2 times the average number of covered lives.
The Notice says that the “fees are effective for policy and plan years ending after September 30, 2012. If the policy year were the calendar year, the fee would apply to calendar policy years 2012 through 2018.” The fees do not apply to plan years ending after September 30, 2019.
Since we are not familiar with how your Plan is organized for tax purposes, it is also not clear how this potential “tax” will impact your Plan. HNE plans to follow up with our self funded groups after the comment period had ended and additional guidance is available.
| Quick Summary: Comparative Effectiveness Research Fees
Q: What are they? A: A new tax added by the Affordable Care Act. Q: Who is responsible to pay them? A: Insurance carriers and plan sponsors of self-insured group health plans. Q: How much are they? A: Year 1: $1 multiplied by the average number of lives covered under the plan (including dependents) After Year 1: $2 multiplied by the average number of covered lives. Q: When does it take effect? A: Plan years ending after September 30, 2012. |
Summary of Benefits and Coverage
On August 27, 2011 the U.S. Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury proposed new rules under the federal healthcare about uniform plan disclosures. The new rules require carriers and group health plan sponsors to provide a four-page summary of benefits and coverage (with print in 12-point font or larger). The summary must describe the benefits, exceptions, or limits on coverage, and cost-sharing provisions. Carriers and group health plan sponsors must provide these summaries to plan participants beginning March 23, 2012. However, on November 18, 2011, the Departments issued new information that delayed the implementation date. It is not yet clear how long the Departments will delay the applicability date. Employers and trade associations have asked the Departments to delay the applicability date until the 2014 plan year or at least 18 months following the issuance of the final regulations. HNE will update you as new information becomes available.
Sample uniform disclosure models are available on the National Association of Insurance Commissioners (NAIC) website and additional information is available at www.HealthCare.gov and www.dol.gov/ebsa/healthreform/. HNE will prepare this summary for your plan on group anniversary dates following the March 23, 2012 effective date.
| Quick Summary: Summary of Benefits and Coverage (SBC)
Q: What are they? A: A four-page summary of plan benefits and coverage. Q: When is the requirement effective? A: Implementation was delayed by the Departments until further notice. Q: Who will prepare and distribute the SBC? A: HNE will prepare and distribute this summary for your plan. |
New Preventive Requirements for Women
As you know, Federal healthcare reform requires non-grandfathered group health plans to provide a variety of preventive services without cost sharing when those services are obtained from a network provider. On August 1, 2011, the Departments of Health and Human Services (HHS), Labor (DOL) and Treasury released guidance on new preventive care requirements related to women. The new requirements apply to non-grandfathered plans beginning on or after August 1, 2012 Plans may use reasonable medical management to help define the nature of the covered service applied to women’s preventive services. Plans will retain the flexibility to control costs and promote efficient delivery of care by, for example, continuing to charge cost-sharing for branded drugs if a generic version is available and is just as effective and safe for the patient to use.
Preventive Services for Women
The latest requirements expand on the requirements for non-grandfathered plans that already apply to women. The new services for which coverage is required are:
- Well-woman visits
- Screening for gestational diabetes
- Human papillomavirus (HPV) testing every three years beginning at age 30
- Counseling for sexually transmitted infections (STIs) for all sexually active women
- Counseling and screening for human immunodeficiency virus (HIV) for all sexually active women
- Contraceptive methods and counseling for all FDA-approved contraceptive methods, sterilization procedures, and patient education and counseling for all women with reproductive capacity (except for employees of “religious employers,” which are exempt from this requirement, as discussed in the next section
- Breastfeeding support, supplies, rental of equipment and counseling
- Screening and counseling for interpersonal and domestic violence.
HNE will be prepared to meet these new requirements by the effective date.
Religious Employer Exemption
The agencies also issued an interim final regulation that would exempt “religious employers” from the requirement to provide contraceptive services under the group health plans they maintain. The agencies state in the regulations’ preamble that the religious employer exemption is consistent with religious accommodation policies maintained by States that require contraceptive services coverage. However, there is a question about the definition of religious employer and HHS has requested comments on this issue. HNE expects further guidance regarding the definition of religious employer and will update our church plans when additional guidance is issued.
Quick Summary: New Preventive Requirements for Women
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W-2 Reporting -Update
Federal healthcare reform requires employers to report the aggregate cost of coverage under employer-sponsored group health plan coverage on employees’ W-2 forms. This is simply a reporting requirement; employees would not pay income or payroll taxes on that amount. In Notice 2010-69, the Internal Revenue Service (IRS) delayed the effective date of this requirement so that it now applies to coverage provided during 2012. IRS Notice 2011-28 provided further relief for smaller employers filing fewer than 250 W-2 forms by making the reporting requirement optional for them at least for 2012 and continuing this optional treatment for smaller employers until further guidance is issued. The aggregate cost of coverage will be determined under rules similar to those that apply to calculating rates for continuation coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA). The IRS has promised guidance will be forthcoming in 2011. The IRS encourages employers to work with their payroll system providers to understand how this will affect their W-2 reporting. For more information, see the 2011 Form W-2, IR-2011-31, Notice 2010-69, Notice 2011-28 and frequently asked questions at http://www.irs.gov/newsroom/article/0,,id=220809,00.html.
| Quick Summary: W-2 Reporting
Q: What is it? A: Employers will be required to report the aggregate cost of coverage under employer-sponsored group health plan coverage on employees’ W-2 forms. Q: When is the requirement effective? A: For W-2 forms reflecting 2012 coverage – usually January 2013, but earlier if requested by an employee who leaves a job during 2012 Q: Does this apply to small businesses, too? A: For smaller employers (those who file fewer than 250 W-2 forms) the reporting requirement is optional, at least for 2012 Q: How do I determine the aggregate cost of coverage? A: Using rules similar to those that apply to calculating rates for continuation coverage under COBRA. The IRS has promised guidance will be forthcoming in 2011. Q: How will this affect my W-2 Reporting? A: The IRS encourages employers to work with their payroll system providers to determine this. ———————————————————————– |
