Healthcare reform-everyone's heard of it and everybody's aware that a sea of change is taking place with respect to healthcare coverage. The 2,400+ page law, The Patient Protection and Affordable Care Act and the 153-page “Reconciliation” Bill (collectively, PPACA), do not lend themselves to an in-depth analysis within the four corners of this publication. The fact is that it is employers, and not individuals, who are the actual providers/purchasers of health insurance and, as such, will be impacted the most by PPACA. This article is intended to serve as a ready reference of the critical concepts found in PPACA and to otherwise attempt to reduce a complex and challenging law to an understandable form for long-term care (LTC) employers. In addition, this article is intended to urge LTC employers to focus on five key elements of the new laws that require immediate employer attention, decision-making, and action.
The healthcare reform mandate in PPACA is complex in its implementation and administration for all employers, including LTC employers unless they are under PPACA's jurisdictional threshold. The sidebar outlines the key components of PPACA and their implementation dates.
1. Should an employer “grandfather” its health plan? A grandfathered health plan is one that was in effect as of March 23, 2010, and which for all intents and purposes remains relatively unchanged in terms of benefit levels, cost-sharing, or insurance carrier/contract. The benefit of grandfathering is that the LTC employer does not have to comply with the following significant healthcare reform requirements:
nondiscrimination in terms of health plan testing, health status, and/or health providers
preventive health services or clinical trials
guaranteed renewability or availability
comprehensive healthcare coverage
Key Components of PPACA and Implementation Timeline
NOTE: This timeline assumes that most employers have a calendar year health plan and the initial impact of PPACA will be on January 1, 2011. For those LTC employers with a non-calendar year plan, the effective dates of the various requirements will begin with the first new plan year following September 23, 2010.
The catch, however, is that due to rising insurance costs, most LTC employers cannot afford to maintain current cost-sharing levels and, therefore, cannot maintain grandfathered status in the long term. However, given the turmoil surrounding healthcare reform and the very real potential for a new and different Congress after the November 2010 elections, employers may want to maintain grandfathered status for at least a year until there is more certainty that healthcare reform-in its current form-will continue to be the law of the land. It should be noted that if an employer opts to have a grandfathered plan, it must place a special Grandfathering Notice in its plan documentation. In any event, before any material changes are made to a plan, the advantages of grandfather status should be weighed.
2. Address issues with your stop/loss or similar insurance carrier. Effective 2011, lifetime limits are eliminated for health plans and annual limits are phased out between 2011 and 2014. What few employers recognize is that stop/loss insurance is generally not considered a health plan and, therefore, not directly subject to the healthcare reform mandates. There is a very real possibility-and danger-that an employer-sponsored health plan (which cannot have lifetime or annual limits or apply preexisting condition exclusions) will not have its stop/loss carrier compliant with these limitations unless the employer takes action now to contractually obligate its stop/loss carrier to comply with the mandates that PPACA places on employer-sponsored health plans.
3. Get your W-2s forms ready-but not until 2012! Until recently, LTC employers were scrambling to update their payroll systems to be ready to capture the value of healthcare benefits offered to employees in 2011. (While typically a W-2 is issued after the conclusion of the tax year, an employee separating from employment can request a W-2 at the time of separation. Accordingly, LTC employers were legitimately concerned that they might need to issue W-2s as early as January 2011-and, often, their payroll systems and technology were not ready for this new requirement.) On October 12, 2010, the IRS issued temporary relief to employers by making the W-2 reporting requirements optional for 2011 but mandatory for 2012. Accordingly, LTC employers have time to comply with this new requirement and should use this extra year to their advantage by ensuring that their payroll systems and technology are capable of capturing the required data.