SECOND OPINIONS: Post Supreme Court ACA Checklist Part I

September 5, 2012 ( - This summer, the U.S. Supreme Court found the Affordable Care Act (ACA) to be constitutional. 

This means that all of the ACA provisions already in place, such as the age 26 rule, preventive care requirements, and restrictions on annual and lifetime limits will continue in place.  And – all of the new and upcoming requirements will go into effect as planned.  Many plan sponsors had been waiting for the Court’s decision to fully launch the next phase of ACA compliance.  Now these plan sponsors should review upcoming requirements and make sure they are prepared to comply.   

Below we provide a checklist of ACA requirements that apply to group health plans and plan sponsors for 2012-2013.  In our next column, we will continue this checklist for ACA requirements that plan sponsors must consider for 2014 and beyond.   

Except where noted, these requirements generally apply to all group health plan coverage (insured and self-funded), including grandfathered plans.  However, each requirement may have its own set of exceptions for more limited benefits, such as HIPAA excepted benefits or retiree-only coverage.  Plan sponsors should review this checklist and make sure they have a strategy for completing their own “to do” lists. 


  • Increase in Restricted Annual Limit Allowed – The ACA disallowed lifetime dollar limits on essential health benefits for plan years on or after 9/23/10, but allowed a phase-in of the restrictions on annual dollar limits over a three-year period.  For the 2011 Plan Year, plans were allowed to impose an annual limit of $750,000 on essential health benefits.  For 2012, this amount is increased to $1.25 million.   
  • W-2 Reporting for Value of Health Care– Beginning in the 2012 tax year (for the January 2013 Form W-2), employers must report the aggregate cost of “applicable employer-sponsored coverage” in a new box on the W-2.  The reporting is for information purposes only.  “Applicable employer-sponsored coverage” generally means coverage under any group health plan made available by an employer that is excludable from the employee’s gross income under Code section 106.   
  • Summary of Benefits & Coverage (SBC) – Plans must provide an SBC for any group health plan benefit option (including grandfathered plans) for enrollments and plan years beginning on or after 9/23/12.   Plans must follow a prescribed template from HHS and must deliver the SBC to all enrollees.  Plans also must notify all eligible individuals (even if not enrolled) about the availability of the SBCs and provide SBCs upon request within 7 business days. 
  • MLR Rebates – Insurers are required to determine a medical loss ratio (MLR) based on the amount of premiums used to pay claims and related expenses.  Some insurers will be required to pay a rebate if they do not meet a minimum MLR threshold.  Plans should start receiving these rebates in August 2012.  There are specific rules regarding how this rebate money may be spent, including ERISA, ACA, and tax restrictions.  The MLR rules only apply to insured plans (including grandfathered plans). 
  • Women’s Preventive Health – The ACA already requires group health plans to cover certain preventive health services at 100% without cost sharing.  The required services are based on recommendations from several task forces listed in the ACA.  This requirement went into effect for plan years starting on or after 9/23/10.  HHS adopted additional recommendations for women’s preventive health, which must be covered for plan years starting on or after 8/1/12.  These include coverage for contraceptives, breastfeeding supplies, and screenings for women.  This requirement does not apply to grandfathered plans. 


  • Increase in Restricted Annual Limit Allowed – Under the phase-in of the restrictions on annual dollar limits on essential health benefits (discussed above), the restricted annual dollar limit for 2013 is increased to $2 million. 
  • Limit on Health FSA Contributions – Starting 1/1/13, the maximum amount an employee may contribute to a health FSA is $2,500 (indexed for inflation). 
  • Exchange Notices – Employers must provide all employees with a notice about coverage available under the Exchange by 3/23/13.  The notice must explain the availability of Exchange coverage, how to access such coverage, and that a premium credit may be available.  This requirement applies to the employer, and the notice must go to all employees, not just health plan participants.  The agencies have not issued further guidance on the content of this notice (which calls into question whether this notice really will be required to be provided by 3/23/13). 
  • PCOR Fee – A fee to fund Patient Center Outcomes Research (“PCOR”) will be assessed on health insurers and sponsors of self-insured health plans.  The fee generally is $1 per covered life with respect to the 2012 plan year and $2 per covered life thereafter.  The fee must be paid on IRS Form 720, which is due July 31st of the following year (so the 2012 fee will be payable by 7/31/13).    
  • Elimination of Medicare Part D Retiree Drug Subsidy Deduction – Currently, employers that provide certain prescription drug coverage to Medicare-eligible retirees can apply for a retiree drug subsidy (RDS) under Medicare Part D.  In the past, this RDS payment was not taxable to the employer, and the employer was still allowed to deduct the amounts paid for prescription drug claims.  Starting 1/1/13, amount paid for claims will not be deductible to the extent RDS money is received (removing some of the tax advantage of the RDS program).  
  • Medicare Tax – Starting 1/1/13, there is an additional 0.9% increase in the employee Medicare tax for employees who earn over $200,000 annually ($250,000 joint return).  This will impact withholding and W-2 reporting for employers.  Plan sponsors may need to verify that their payroll departments or service providers are aware of this new requirement.  

While the next big push in health care reform is in 2014, when the Exchanges are up and running, plan sponsors clearly have plenty on their checklists for the remainder of 2012 and 2013.  Stay tuned for our next installment – Checklist for 2014 and Beyond. 


Got a health-care reform question?  You can ask YOUR health-care reform legislation question online at    

You can find a handy list of Key Provisions of the Patient Protection and Affordable Care Act and their effective dates at     


Christy Tinnes is a Principal in the Health & Welfare Group of Groom Law Group in Washington, D.C.  She is involved in all aspects of health and welfare plans, including ERISA, HIPAA portability, HIPAA privacy, COBRA, and Medicare.  She represents employers designing health plans as well as insurers designing new products.  Most recently, she has been extensively involved in the insurance market reform and employer mandate provisions of the health-care reform legislation.  

Brigen Winters is a Principal at Groom Law Group, Chartered, where he co-chairs the firm's Policy and Legislation group. He counsels plan sponsors, insurers, and other financial institutions regarding health and welfare, executive compensation, and tax-qualified arrangements, and advises clients on legislative and regulatory matters, with a particular focus on the recently enacted health-reform legislation.  

PLEASE NOTE:  This feature is intended to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.