Health Care Reform

The Patient Protection and Affordable Care Act (PPACA), H.R. 3590, and the Health Care and Education Affordability Reconciliation Act of 2010 were signed into law on March 23, 2010. 

Individual and Group Plans are designated as Bronze, Silver, Gold or Platinum, with actuarial values of 60%, 70%, 80% or 90% respectively.  Individuals under age 30 may also access a low cost, Catastrophic plan.  We are certified to offer plans through Covered California. 

There are tax penalties for most individuals who do not purchase coverage.  You may buy your health plan inside or outside of the exchange, and using a broker will not increase your cost in any way. 

Part of the Health Care Reform law includes a provision that requires certain pediatric dental and vision benefits.   These may be included in the health plan, or purchased separately, and there are different offerings for groups and individuals. 

If you’ll be working with us to purchase coverage through Covered CA and hope to receive a tax subsidy to help with the cost of health insurance, there are several pieces of information you’ll need in order to complete their application/enrollment process.  This includes the dates of birth and social security numbers of all of your family members, and an estimate of your modified adjusted gross income for the year of your coverage.  You’ll also need information about any benefits currently offered through your employer (and your share of cost for those benefits, including your dependents’ coverage). 

Another key provision is coverage of preventive services without deductibles or copayments.  Under the regulations, plans must cover without copay, coinsurance or deductible — certain preventive services that have “strong scientific evidence of their health benefits.”  On July 14, 2010 the Departments of Treasury, Labor and Health and Human Services jointly released Interim Final Rules (IFRs) for group health plans and health insurance issues related to coverage of preventive services.    Since these are “Interim” Final Rules, the final rules may eventually differ, but these are the best we have at this point.


General list of Preventive services to be offered without copay, coinsurance or deductible:

Evidence-based preventive services: This list of items is taken from the current recommendations of the United States Preventive Services. They are included only if they have a rating of A or B. This broad list generally includes:

  • Breast cancer and cervical cancer screenings
  • Colon cancer screenings
  • Screening for vitamin deficiencies during pregnancy
  • Screenings for diabetes, high cholesterol and high blood pressure
  • Contraceptives

Routine vaccinations: A list of immunizations – recommended by the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention – are included in the rule. They are considered routine for use with children, adolescents, and adults and range from childhood immunizations to periodic tetanus shots for adults.

Prevention for children: The rule includes preventive care guidelines for children – from birth to age 21 – developed by the Health Resources and Services Administration with the American Academy of Pediatrics. Services include regular pediatrician visits, vision and hearing screening, developmental assessments, immunizations, and screening and counseling to address obesity.

Prevention for women: The regulation mandates certain preventive care measures for women. These recommendations will be in place until new requirements for prevention for women are issued by the United States Preventive Services Task Force or appear in comprehensive guidelines supported by the Health Resources and Services Administration.

Full list of covered preventive services issued as part of the Interim Final Regulations:

Billing and Office Visits

If a recommended preventive item or service is billed separately from an office visit, then cost-sharing may be applied to the office visit

If a recommended preventive item or service is not billed separately from an office visit and the primary purpose of the office visit is not the delivery of the preventive item or service, then cost-sharing made be applied to the office visit.

Health Care Reform’s Fifth Anniversary, but More Changes to Come

Since the Patient Protection and Affordable Care act was signed into law in March, 2010, and we’ve all heard the woes of individuals losing their health plans, enrolling through Covered California, tax credits, and SHOP (the group portion of Covered California), it’s easy to think we’ve seen all of the changes.  We haven’t. Most small group clients who had renewals in the last quarter of the year (December 1 is now a busier renewal date than January 1) “Grandmothered” their old plan in 2014, keeping their 2013 benefits for one more year. Unless there is another extension of this provision, December 2015 will be a very tough renewal cycle for those groups, who will need to move to the more expensive ACA plans with different rating systems and other changes.

Large Groups, who had been given an extension on implementation of the plans with “Minimum Essential Coverage” (MEC), must start offering these plans this year. There are “shared responsibility” mandates, with stiff penalties if plans do not comply.  The employer must offer minimum essential coverage to at least 95 percent of full time employees (30 hours/week) AND their dependents. There are rules about which employees count in determining the number of full time equivalent employees (to see if the law applies) and who is eligible.

“Affordable” means that the employer must contribute a sufficient amount of the premium so the employee’s portion of the cost is less than 9.5% of the employee’s earnings. If an employee’s  contribution is higher than this level, he or she could obtain subsidized coverage through the exchange. Employers will be penalized financially based on the number of employees who leave the group for the exchanges. If an employer does not offer affordable coverage, the penalty is up to $2000/year per employee.  There are other penalties if coverage is offered but does not meet the minimum value or if it is “unaffordable”.

2015 is the first year Applicable Large Employers (those with an average of 50 or more full-time employees plus part time equivalents for the prior calendar year, or ALE) are subject to the requirement to report information to the IRS under Internal Revenue Code Section 6056.

Information that must be reported includes:
1. Employer Name, address and tax ID number (EIN)
2. Name and phone number of the contact person at the employer
3. Calendar year for which information is being reported
4. A certification that the ALE offered full-time employees and dependents the opportunity to enroll in Minimum Essential Coverage under an employer-sponsored plan on a month by month basis
5. The months during the calendar year for which coverage was available
6. Each employee’s share of the lowest cost monthly premium (self only) on a month by month basis
7. Number of full time employees for each month
8. Name address and SSN for each full time employee during the year and the months during which the employee was covered under the plan
9. Additional information specified in the IRS form 1094-C.

Employees will be need to be given form 1095C to use when filing their taxes, too.
There is an alternative method to simplify these reporting requirements if the group gives employees coverage at a cost to the employee of 9.5% of the Federal Poverty Level (about $1100 in 2015). There are financial penalties if the reporting is not done by the deadlines in the law.

In 2016 “Small Group” will mean groups up to 100 employees, as opposed to groups with up to 50 employees as we have currently. If you have between 50 and 100 employees, this will mean the end of your Composite rating and entering into the world of Age Rating, among other things.

And then there’s the Cadillac Tax…..

Affordable Care Act Cadillac  Tax takes effect in 2018

The High Cost Employer-Sponsored Health Coverage Excise Tax, or “Cadillac Tax”, is scheduled to start in 2018. The goal is to reduce health care usage and costs by encouraging employers to offer plans that are “cost- effective and engage employees in sharing the cost of care”. The purpose is to generate $80 billion over the next 10 years to help finance the expansion of health coverage.  It is a permanent annual tax on employers that provide high-cost benefits through an employer sponsored group health plan.

Here are the specifics:

  •  The tax is 40% of the cost of plans that exceed predetermined threshold amounts
  •  Cost includes the total premiums paid by both employers and employees,but not cost-sharing amounts such as deductibles and copays when care is received
  •  For planning purposes, the thresholds for high-cost plans are $10,200 for individual coverage, and $27,500 for family coverage (will be updated for2018 when final regulations are issued and indexed for inflation in future years
  • Thresholds will be adjusted for High risk professions such as law enforcement and construction, Group demographics including age and gender

The tax is based on the total cost of each employee’s coverage above the threshold amount and  includes premiums paid by employers and employees plus contributions to Health Care Flexible Spending Accounts, Health Reimbursement Accounts and Health Savings Accounts, as well as the cost of  Employee Assistance Plans with counselling benefits, onsite medical clinics and wellness programs. It will exclude premiums for stand-alone dental, vision, disability, accident coverage and Long term Care Insurance.

For example, if you have a $12,000 premium on an individual’s plan (using the current
threshold values), you would pay an excise tax of $720 per covered employee.
$12,000 – $10,200 = $1,800 above the threshold
$1800 x 40% = $720
If the self-only coverage is $15,000 annually, then the excise tax will be $1,920

Note, the tax is NOT tax deductible!

There is no language in the law to adjust the thresholds based on rates in geographic regions, so if costs in California are higher in 2018 than in other parts of the country, we’ll be paying higher taxes for the same level of benefits offered in other states. The IRS is expected to release regulations, and guidance in the near future to clarify the details.

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