Sponsors Should Focus on Compliance, Cost Management for ACA

July 12, 2012 (PLANSPONSOR.com) - Following the Supreme Court’s recent ruling to uphold the Patient Protection and Affordable Care Act, plan sponsors should focus on both complying with the new rules and the longer-term impact for their plans.

During a webinar sponsored by Fidelity and hosted by PLANSPONSOR, experts emphasized that regardless of the November presidential election outcome, plan sponsors should not delay their preparations.

The milestone years for the health care reform are 2014 and 2018. The year 2018 seems far down the road, but “that’s only four annual enrollments away,” cautioned Brad Kimler, executive vice president of benefits counseling at Fidelity.

“The longer you wait [to plan], the more aggressive you’re going to need to be,” said Jeff Munn, vice president of benefits policy development at Fidelity.

Regarding near-term compliance, companies should prepare to deliver on employee communications, payroll issues, and financial and reporting information.  “Get on board and keep moving with the compliance,” said Christi Wise, senior vice president of product management at Fidelity.

Employee Communications  

  •  $2,500 health care flexible spending account (FSA) limit effective January 1, 2013;
  •  Notice of exchanges by March 1, 2013; and
  •  Summary of Benefits and Coverage/Uniform Glossary for annual enrollment beginning September 23, 2012 and beyond.


  • Medicare taxes for higher income employees effective January 1, 2013; and
  • W-2 reporting of health care value distributed by January 31, 2013.


Financial and Reporting Information  

  • Comparative effectiveness research fees apply to calendar year plans from 2012 to 2018, first due July 31, 2013;
  • Elimination of retiree drug subsidy (RDS) deductibility for employers effective January 1, 2013; and
  • Medical loss ratio rebates must be paid by August 1, 2012.


For the longer term, plan sponsors should prepare for 2014 changes and implement communication strategies surrounding things such as employer mandate/penalties; increases in allowed rewards for wellness programs from 20% to 30%; and the elimination of preexisting condition limitation exclusions.

Sponsors should also prepare well in advance for the 2018 excise tax on high-cost health plans with a 40% tax on excess value, as well as higher thresholds for early retirees and specific high-risk occupations.

With all the health care changes on the horizon, it is imperative that employers focus on cost control now. Without cost control, the Fidelity webinar panelists cautioned, employers may be forced to reduce benefits dramatically when the excise tax becomes effective in 2018.

Employers should get compliance issues out of the way and then make key long-term decisions about managing costs to stay under the excise tax cap as long as possible, Kimler said.