Don't panic. The passage of the Patient Protection and Affordable Care Act, as well as the Health Care & Education Affordability Reconciliation Act of 2010 make some significant changes to health insurance and will certainly impact employers sponsoring health plans and other employee benefit plans, but you don' t have to change everything today. Although we have yet to receive much of the guidance and supplemental regulation that will be necessary to implement these new laws (and in some instances to even understand them), below is what I believe are the initial provisions that should impact employers.
Beginning the first plan year 6 months after the effective date of the law (figure 1/1/11 for most plans), group health plans, including employer sponsored plans, can no longer have a lifetime cap on benefits and have to offer coverage to dependent children up to age 26. Beginning with the 2014 plan year, group health plans will be prohibited from (1) denying coverage based on pre-existing conditions, (2) requiring waiting periods of more than 90-days for eligibility and (3) having annual dollar limits on benefits.
Beginning in 2013, Flexible Spending Accounts will be limited to $2,500 maximum per year.
In 2014, "exchanges" will be set up where people and small businesses without insurance can go to buy insurance and supposedly lower rates. Large employers will get to use the exchanges in 2017.
Employers will not be required to offer health insurance to their employees. If an employer has more than 50 employees, they will have to pay a penalty of $2,000 for each full time employee (exempting the first 30 employees) if any of their employees ends up purchasing insurance through the exchange. Employers will also be hit with a $3,000 for each employee who declines employer coverage and instead purchases coverage through an exchange. Presumably this implies the employer has bad coverage or it costs too much so it creates incentives for employers to sponsor good coverage. This will be effective in 2014. Interesting that it does not apply to part-time employees and employers do not have to include coverage for part-time employees. But, as with COBRA, part-time employees will but counted as a partial full-time employee for the purpose of measuring the 50-employee threshold.
It looks like it applies to ALL employers, public or private but there are constitutional issues surrounding federal requiring state entities purchasing insurance that will have to be sorted out.
The "Cadillac Tax," if it survives, would begin in either 2013 or 2018 (depending on which version of the law is finalized). It provides that the insurer for any employer-sponsored plan (which would be the employer if the plan is self-insured and presumably the multiemployer fund itself in a multiemployer plan, or maybe even the union) will owe a 40% excise tax to the extent the cost of coverage exceeds certain thresholds. This provision could have a significant impact on collective bargaining but it is not yet clear when or if it will go into effect and it will require lost of regulations to manage it.
That said, there are lots more provisions in this law that have to be sorted out. We will be providing continued updates as more guidance becomes available. If you have any specific questions or need further assistance, please contact your attorney at Fox Rothschild.
