Don’t Let Health Care Reform Sneak Up on You

Employers tend to have a short attention span with health care reform; their focus tends to be on the immediate year, but they need to look ahead to 2013, so they can be ready when their contracts with benefit providers are renewed, Ellis told PLANSPONSOR. Employers should establish policies and procedures to ensure compliance just as they do with their retirement plans.  

According to Ellis, employers should turn to:  

• Health insurance providers – Providers will know what provisions are coming into effect, how to comply in plan design and how this will change pricing of contracts; 
• An employee benefit consultant – A consultant that has strong knowledge of the subject matter and constantly follows the regulations can help employers prepare for what employees will feel and react to; and 
• An accountant – Ellis notes that the ACA is a tax law as well as an insurance law; an accountant can inform an employer what the business will experience from a tax and accounting standpoint. 

Ellis adds that employers should also have access to legal help for documentation issues.

Upcoming Changes  

“The good news is there are not a ton of changes; this is the calm before the 2014 storm,” Ellis said. But, he addressed changes coming for 2013 that employers should know.  

The law mandates a zero co-pay for preventive services; these are covered at 100%. This provision is getting the most attention now because the government has expanded that recently to include contraceptive coverage, effective for plan years on or after 8/1/12. This could bump up premiums for employers because new benefits that are now federally mandated will need to be added to contracts.  

In addition, as of 1/1/2013 contributions to flexible spending accounts (FSAs) will be limited to $2,500 per year. The limit will need to be adhered to in administering the plan, and employees will need to be informed of the new limit.    

Also in January 2013, employers will need to be prepared to list the value of their health benefits to employees on employee W-2s. According to Ellis, another payroll-related change will be in FICA deductions. As of 1/1/13 the health reform law increases Medicare tax for high-income individuals; from 1.45% to 2.35% for wages exceeding $250,000 for married couples and $200,000 for singles.  

As of March 1, 2013, employers will be required to issue a notice of exchange coverage to existing employees and new employees at the time of hire, letting employees know about the availability of state health care exchanges, services the exchanges provide and how to contact the exchanges. Employers need to follow the developments of state exchanges.  

An issue that has not been talked about much is an auto enrollment provision for employers with 200+ employees, Ellis says. Effective 3/1/13, these employers who offer one or more health plans are required to automatically enroll new employees into one of those plans. The employee is allowed to opt out, just like auto enrollment in retirement plans.