The enactment of the Affordable Care Act (ACA) in 2010 is ushering in changes to the health care system that impact individual consumers and employers alike. The law includes major health insurance market reform provisions that will expand access to coverage for many more Americans beginning in 2014.
A number of important provisions, however, will have an impact on the marketplace in 2012. What follows is a brief description of the key issues we are tracking for 2012. The list is not meant to be exhaustive, and other ACA-related issues may be of equal or greater concern to different individuals and businesses:
Scheduled for 2012
Summary of Benefits and Coverage: Insurers and group health plans must provide a summary of benefits and coverage document to enrollees/potential enrollees at specific times, including during enrollment and re-enrollment. The new rules also require 60-days-prior-notice to enrollees when a health plan or issuer modifies the terms of the plan or coverage and the change impacts a previously issued SBC. Per the final rule released by the U.S. Departments of Labor, Health and Human Services, and Treasury (the Departments) on February 14, 2012, the requirement is effective for open enrollment activity that begins on or after September 23, 2012.
An FAQ issued jointly by the Departments related to SBC documents released on March 19, 2012 says that the Departments will not impose penalties on plans and issuers during the first year of applicability, as long as they are working diligently and in good faith to provide the required SBC content in an appearance that is consistent with the final regulations. A subsequent FAQ released on May 11, 2012 says that the Departments will not impose penalties for failure to provide the SBC or uniform glossary on plans and issuers that are working diligently and in good faith to comply.
MLR Reporting: The medical loss ratio (MLR) provision requires health plan issuers to meet new minimum medical spending requirements – 85 percent in the large group market and 80 percent in the small group and individual markets. Using 2011 data, insurers in 2012 begin to face the possibility of paying rebates to policyholders if the MLR thresholds are not met. In most instances, insurers/plan issuers must issue rebates to group health policyholders rather than to subscribers. Rebate process simplification in the new final rules released in December 2011 should help employers effectively manage rebates on behalf of their plan beneficiaries. Plan issuers must issue a notice of rebate to policyholders and subscribers, and rebates must be paid by August 1, 2012 for the 2011 experience year. Reporting and payment of any rebates that are due will occur annually thereafter.
W-2 Reporting: Employers must begin preparing this year to report on employees’ 2012 W-2 forms – to be issued in January 2013 – the aggregate cost of their employer-sponsored coverage. Employers, however, may have chosen to report earlier on employees’ 2011 W-2 forms issued in January 2012. For purposes of this reporting requirement, “applicable employer-sponsored coverage” includes coverage under any group health plan made available to an employee by the employer, regardless of whether the employer or the employee paid the cost. Applicable coverage as defined includes major medical and employer flex credits contributed to a health flexible spending arrangement (FSA), if the flex credits exceed the employee’s salary reduction to the FSA.
Employers are required to report the cost of coverage provided under hospital indemnity, other fixed indemnity or specified disease or illness policies only if the employers contribute to the cost of that coverage or if the coverage is purchased by employees on a pre-tax basis through a cafeteria plan. Employers do not need to report the cost of wellness programs, employee assistance programs (EAP) and on-site clinics unless the employers include the cost of these benefits when charging COBRA premiums.
Definition of a Full-Time Employee: A key definition for the employer mandate that becomes effective in 2014 is the definition of full-time employee. The number of full-time employees will determine application and cost of the employer mandate. The definition of full-time employees is also relevant to ACA’s automatic enrollment provision, which will become effective after final regulations are issued (anticipated to be 2014).
For purposes of the employer mandate, the ACA defines full-time employees as those who work an average of at least 30 hours per week. However, it is unclear how this definition is measured and over what time period it is measured. When determining the number of full-time employees relative to the employer’s affordable coverage requirement, employers will be allowed to exclude those full-time seasonal employees who work less than 120 days during the year. Part-time employees are counted as full-time equivalent employees in determining whether an employer is subject to the employer mandate, but part-time employees are excluded from the penalty calculation.
The ACA does not define full-time employee for purposes of the automatic enrollment provision. The agencies have announced that they intend to coordinate the definition of full-time employees for purposes of the employer mandate with the definition for purposes of automatic enrollment.
Source Aetna is one of the nation's leading diversified health care benefits companies, to read the complete report visit: www.aetnatools.com