Healthcare Reform The Affordable Care Act (ACA) introduced a number of new requirements for sponsors of self-funded health plans. Many important provisions implemented through 2020 are provided in the chart below.
Provision
Effective Date
Description
2020 Cadillac tax
Jan. 1, 2020
The ACA imposes a 40 percent excise tax on the cost of coverage of an employer-sponsored plan exceeding $10,200 for single coverage and $27,500 for family coverage.
2018-2019 No new provisions known at this time.
2017 Anti-Discrimination Regulations
Benchmark Plan Election Rules
Cost Sharing
Patient Centered Outcomes Research Institute (PCORI) Fee Reporting Requirements
Summary of Benefits and Coverage (SBC)
Renewal date on or after Jan. 1, 2017
Covered entities must remove discriminatory exclusions from Plan Documents.
Plan years beginning on or after Jan. 1, 2017
If a company’s health plan includes an annual or lifetime dollar maximum, the company must select a benchmark plan from one of the 51 EHB benchmark plans in a state or Washington, D.C., or in one of the three Federal Employee Health Benefit Programs that supports applying such dollar maximums.
2017 plan year
A group health plans’ annual in-network out-of-pocket maximum for Essential Health Benefits for the 2017 plan year cannot exceed $7,150 for self-only coverage and $14,300 for family coverage. The in-network individual out-of-pocket maximum applies to all individuals, regardless of whether the individual is covered by a selfonly plan or family plan (including a high-deductible plan). Remember, self-funded group health plans are not required to cover Essential Health Benefits. But, if they do, they cannot impose lifetime or annual dollar limits on those benefits.
2017
The PCORI Fee is $2.26 per average number of covered lives for plan years ending on or after Jan. 1, 2017, through Sept. 30, 2017.
2017 for the 2016 coverage period
Regulations implementing Sections 6055 and 6056 of the Internal Revenue Code require employers to provide detailed information about their plan and enrollees.
On or after April 1, 2017
Revised SBC and supporting documents are mandated for use.
** Indicates that provision does not apply to grandfathered plans
Provision
Effective Date
Description
2016 Anti-Discrimination Regulations
By Oct. 16, 2016
Each covered entity must post the required notice and foreign language taglines or the anti-discrimination statement and top two foreign language taglines in the states in which the covered entity operates in a conspicuously visible font size in significant publications and communications, physical locations and the entity’s website, as identified by Section 1557 anti-discrimination regulations.
2016 plan year
A group health plan’s annual in-network out-of-pocket maximum for EHBs cannot exceed $6,850 for self-only coverage and $13,700 for all other coverage. The final regulation also clarifies that the in-network individual out-of-pocket maximum applies to all individuals, regardless of whether the individual is covered by a selfonly plan or family plan (including a high-deductible plan). Remember, self-funded group health plans are not required to cover EHBs. But, if they do, they cannot impose lifetime or annual dollar limits on those benefits.
Habilitative Services
2016
HHS adopted a uniform definition of habilitative services (an EHB) for when the state-selected benchmark plan does not include these services or the state has not enacted its own definition. This definition is also found in the Uniform Glossary of Health and Coverage and Medical Terms: “Healthcare services that help a person keep, learn or improve skills and functioning for daily living. Examples include therapy for a child who is not walking or talking at the expected age. These services may include physical and occupational therapy, speech-language pathology and other services for people with disabilities in a variety of inpatient and/or outpatient settings.” Self-funded plans do not have to include these services as a benefit. But if they do, they can’t put annual or lifetime dollar limits on these benefits.
Patient Centered Outcomes Research Institute (PCORI) Fee
2016
The PCORI Fee is $2.17 per average covered life for plan years ending on or after Jan. 1, 2016, through Sept. 30, 2016. The fee is $2.26 per average number of covered lives for plan years ending on or after Oct. 1, 2016, through Dec. 31, 2016.
2016 for the 2015 coverage period
Regulations implementing Sections 6055 and 6056 of the Internal Revenue Code require employers to provide detailed information about their plan and enrollees. The first report will be due in 2016 for the 2015 calendar year.
2016
The U.S. Department of Health and Human Services set the 2016 contribution rate at $27 per year per average covered life.
Cost Sharing
Reporting Requirements
Reinsurance Assessment Fee
** Indicates that provision does not apply to grandfathered plans
Provision
Effective Date
Description
2015 Administrative Simplification proposed rule
For controlling health plans that obtain a For Health Plan Identifier (HPID)* on or after Jan. 1, 2015, and on or before Dec. 31, 2016 Controlling health plans control their own business activities, actions or policies, or are controlled by an entity that is not a health plan.
Certificates of credible coverage
Cost Sharing** Employer mandate
Dec. 31, 2014
Plan years on or after Jan. 1, 2015. 2015 Compliance requirements mandated for employers with 100 or more fulltime employees and equivalents.
Must meet the submission requirements for the first certification of compliance within 365 days of obtaining an HPID. * On Oct. 31, 2014, U.S. Department of Health and Human Services (HHS) announced a delay in enforcing HPID requirements until further notice.
Effective Dec. 31, 2014, the ACA no longer requires certificates of credible coverage to be issued. Previously, HIPAA required these certificates to be issued as proof of previous health coverage. However, a former employee may require proof of coverage under a client’s health plan so that the individual can enroll in a new health plan under special enrollment rights. In this situation, CoreSource may be able to provide a certificate of prior coverage after Dec. 31, 2014, at a client’s request. Clients should discuss this issue with their Client Manager. In-network OOP maximum may not exceed $6,600/single, $13,200 for family coverage An employer may be subject to a financial penalty1 if it either does not provide any minimum essential coverage to its employees, or if that health coverage it does provide is unaffordable2 or does not provide minimum value.
Groups with 50-99 full-time employees and equivalents are exempt in 2015 provided they meet certain criteria. 2016 Compliance requirements extended to all employers with 50-99 fulltime employees and equivalents. Compliance requirements continue for employers with 100 or more full-time employees and equivalents.
Medical Flexible Spending Account (FSA) limits Minimum Value
Patient Centered Outcomes Research Institute (PCORI) Fee Reinsurance Assessment Fee
Plan years on or after Jan.1, 2015
Annual employee salary reductions to a medical FSA are raised to $2,550. Previously, for plan years on or after Jan. 1, 2013, contributions were limited to $2,500.
April 28, 2015
HHS amended the minimum value definition, affecting whether the employer is subject to a penalty and its employees eligible for subsidies. Plans will meet the minimum value requirement if they: > cover 60 percent of total allowed costs and > effective April 28, 2015, provide substantial coverage of both inpatient hospital and physician services.
2015
The PCORI Fee is $2.08 per average number of covered lives for plan years ending on or after Jan. 1, 2015, and Sept. 30, 2015, and $2.17 per average number of covered lives for plan years ending on or after Oct. 1, 2015, through Dec. 31, 2015.
By Nov. 15, 2015, plan sponsors need to submit on Pay.gov their health plan’s average number of covered lives for the first nine months of the calendar year. Of the annual $44-per-average-coveredlife contribution rate, $33 per average covered life will be payable in January 2016. The remaining $11 per average covered life will be payable later in the fourth quarter of 2016.
** Indicates that provision does not apply to grandfathered plans
In 2015, the fee will be $44 per year per average covered life. In 2016, the amount of the fee is $27 per year per average covered life.
Provision
Description
Effective Date
2014 90-day waiting period
Plan years on or after Jan. 1, 2014
Plans may not impose a waiting period of more than 90 days. Starting with the 2014 plan year, employers may also impose an “orientation period” not to exceed one calendar month less one calendar day.
Administrative Simplification proposed rule
For controlling health plans that obtain a Health Plan Identifier (HPID)* before Jan. 1, 2015
Must meet the submission requirements for the first certification of compliance on or before Dec. 31, 2015 * On Oct. 31, 2014, HHS announced a delay in enforcing HPID requirements until further notice.
Controlling health plans control their own business activities, actions or policies, or are controlled by an entity that is not a health plan.
Clinical trials**
Jan. 1, 2014
Cost sharing**
Plan years on or after Jan. 1, 2014.
Coverage for routine patient costs3 incurred during an approved clinical trial. In-network out-of-pocket maximums may not exceed the following limits: $6,350/single and $12,700/family for 2014. In addition, all member in-network cost-sharing, such as copayments, coinsurance and deductibles, must apply to the out-of-pocket maximum. Special rules apply for the 2014 plan year if the plan uses more than one service provider to administer benefits (such as pharmacy benefits manager for pharmacy benefits and a TPA for other medical benefits).
Electronic funds transfer and remittance advice transactions Essential Health Benefits (EHBs)4
Health Plan Identifier (HPID)
Jan. 1, 2014
Covered entities must conduct transactions in accordance with operating rules for electronic funds transfer and electronic remittance advice.
Plan years on or after Jan. 1, 2014
ERISA self-funded plans do NOT have to include 10 categories of benefits known as EHBs. However, if such self-funded plans do include EHBs for plan years beginning on or after Jan. 1, 2014, they are prohibited by the ACA from imposing lifetime or annual dollar limits on such benefits.
On Oct. 31, 2014, HHS delayed enforcement of the following requirements:
Health plans, including small health plans, must obtain a HPID for use in HIPAA standard transactions if the health plans are identified in the HIPAA standard transactions, effective Nov. 7, 2016.*
Health plans, excluding small health plans, must obtain a HPID by Nov. 5, 2014.
* On Oct. 31, 2014, HHS announced a delay in enforcement of obtaining an HPID and in using an HPID in transactions until further notice.
Small health plans, those with annual receipts of $5 million or less, must obtain a HPID by Nov. 5, 2015.
New SBC guidance
Jan. 1, 2014
A revised SBC must be provided to all employees by the first day of the open enrollment process for all plan years beginning Jan. 1, 2014. For all plan years, the SBC incorporates all plan changes and indicates whether the plan provides minimum essential coverage5 and minimum value6.
No pre-existing exclusions for adults
Plan years on or after Jan. 1, 2014
Health plans may no longer impose pre-existing condition exclusions for adults.
** Indicates that provision does not apply to grandfathered plans
Provision
Description
Effective Date 2014
The fee is $2 per average number of covered lives for plan years ending on Jan. 1, 2014, through Sept. 30, 2014, and $2.08 per average number of covered lives for plan years ending on or after Oct. 1, 2014, through Dec. 31, 2014.
Reinsurance Assessment Fee
Due to an extension from CMS, plan sponsors have until Dec. 5, 2014, to submit on Pay.gov their health plan’s average number of covered lives for the first nine months of 2014. Of the annual $63-per-average-covered-life contribution rate, $52.50 per average covered life will be payable in January 2015. The remaining $10.50 per average covered life will be payable late in the fourth quarter of 2015.
The program funds a three-year reinsurance program for carriers in the individual health insurance market. In 2014, the fee is $63 per year per average covered life.
Wellness incentives
Plan years on or after Jan. 1, 2014.
The rule aims to give every wellness program participant the opportunity to receive the full amount of any reward or incentive, regardless of any health factor. The rule also increases the allowable incentive for health-contingent programs from 20 percent to 30 percent of the cost of coverage (50 percent for tobacco programs).
Patient Centered Outcomes Research Institute (PCORI) Fee
For more information, visit www.coresource.com and read “Final rule on wellness program incentives - What it means for you” on the Healthcare Reform Toolkit.
2013 Auto-enrollment
Delayed, pending issuance of regulations
Exchange notice
Oct. 1, 2013
Employers must provide all employees with a notice about exchanges. Model notices are available on the U.S. Department of Labor website.
Plan years on or after Jan. 1, 2013
Annual employee salary reduction contributions to an FSA are now limited to $2,500.
Medical Flexible Spending Account (FSA) limits Patient Centered Outcomes Research Institute (PCORI) Fee
Tax deductions and employer-sponsored prescription plans for Part D eligible retirees W-2 reporting
Report on IRS form 720 by July 31 of the calendar year immediately following the last day of the plan year.
Jan. 1, 2013
Every year, starting with the 2012 tax year
Employers with 200 or more employees must automatically enroll all eligible employees in the employer-sponsored health plan with the option to opt out.
An annual fee of: > $1 per average number of covered lives for plan years ending on or after Jan. 1, 2013, through Sept. 30, 2013 > $2 per average number of covered lives for plan years ending on or after Oct. 1, 2013, through Dec. 31, 2013 Tax deductions are eliminated for employers that maintain prescription drug plans for Part D eligible retirees.
Employers required to file 250 or more W-2 forms must report the total cost of their group health benefit plan on the W-2s.
** Indicates that provision does not apply to grandfathered plans
Provision
Effective Date
Description
2012 Patient Centered Outcomes Research Institute (PCORI) Fee
2012
Summary of Benefits and Coverage (SBC) document
Plan years on or after Sept. 23, 2012
Employers must make a standardized summary of health plan coverage available to enrollees.
Women’s preventive health services**
Plan years on or after Aug. 1, 2012
Coverage for contraceptive services for women without cost-sharing. (Exceptions have been made for some employers.)
Over-the-counter (OTC) drugs and FSAs, HSAs and HRAs
Plan years on or after Sept. 23, 2010
OTC drugs not prescribed by a doctor no longer qualify for tax-free reimbursement under FSAs, HSAs and HRAs.
Tax on non-qualified HSA distributions
Plan years on or after Sept. 23, 2010
Increases to 20 percent
Plan years on or after Sept. 23, 2010
> Removal of annual and lifetime dollar limits > Coverage for dependents to age 267 > No pre-existing condition exclusions for persons younger than 19 > Increased parity for out-of-network emergency services** > 100% coverage for certain preventive services** > Additional claim and appeal rights**
The fee is $1 per average number of covered lives for plan years ending on or after Oct. 1, 2012, and Dec. 31, 2012.
2011
2010 Mandated Benefit Provisions
** Indicates that provision does not apply to grandfathered plans 1
If no health plan is offered, and one full-time employee (FTE) receives a premium tax credit or cost-share subsidy through an exchange, the annual penalty is $2,000 per full-time employee, and the first 30 full-time employees are discounted (80 FTEs in 2015) for purposes of calculating the penalty. If a health plan is offered, but that plan does not provide minimum value or is unaffordable, and one full-time employee receives a premium tax credit or cost-share subsidy through an exchange, the annual penalty is the lesser of: (a) $3,000 ($3,120 for calendar year 2015 and $3,240 for calendar year 2016) per FTE who is eligible for the tax credit or subsidy or (b) $2,000 ($2,080 for calendar year 2015 and $2,160 for calendar year 2016) per FTE, and the first 30 FTEs are discounted (80 in 2015) for purposes of calculating the penalty.
An employer’s health plan is unaffordable if the employee’s contribution to the cost of employee-only coverage (in the lowest cost plan option) is more than 9.5 percent (9.56 percent for 2015 and 9.66 percent for plan years beginning in 2016) of the employee’s household income. An employer also can use safe harbors identified by the IRS to determine if its health plan is affordable.
2
Routine patient costs are items and services consistent with coverage provided in the plan that are typically covered for an individual not participating in a clinical trial. The coverage does not apply to the actual device, equipment or drug that is typically given to participating patients free of charge by the medical device or pharmaceutical company sponsoring the trial.
3
Essential Health Benefit (EHB) categories are ambulatory patient services; emergency services; hospitalization; maternity and newborn service; mental health and substance abuse services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory service; prevention and wellness services and chronic disease management; and pediatric services, including oral and vision care.
4
5
inimum essential coverage refers in general to coverage under a government-sponsored program, such as Medicare or Medicaid; an eligible employer-sponsored plan; a plan offered in the individual insurance market; or other coverage M described in applicable regulations. It does not include HIPAA-excepted benefits such as critical illness or hospital indemnity insurance.
6 A group health plan provides minimum value if the percentage of the total allowed costs of benefits provided under the plan is at least 60 percent, and, effective April 28, 2015, includes substantial coverage of both inpatient hospital and physician services. 7 To avoid possible penalties, businesses subject to the employer mandate must provide health coverage to a dependent adult child through the end of the month in which he or she attains age 26. If coverage extends beyond the 26th birthday, the value of the coverage can continue to be excluded from the employee’s income for the full tax year (generally a calendar year) in which the adult dependent child turns 26.
PLEASE NOTE: This material represents a high-level summary of the ACA provisions and may not be construed as tax, legal or compliance advice. Please consult your professional benefits adviser or legal counsel regarding how these provisions may impact your specific health plan. Last Updated: November 16, 2016
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Visit www.coresource.com/healthcarereform for more information on the ACA.
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