The media noise on implementation of the Affordable Care Act is deafening. It’s important for employers and administrators to familiarize themselves with the items outlined below so they can ensure compliance.
Effective Jan. 1, 2014, employers must provide notice to employees within 14 days of their hire date. Specifically, health care reform requires employers to include the following information: a description of marketplace services; potential availability of subsidies; potential loss of employer contributions to health care; and marketplace contact information.
Employers are free to craft their own marketplace notices, but the government has provided two templates available at bitly.com/qrfsla.
Employers desiring to maintain grandfathered health plan status must include a statement in any materials provided to a participant or beneficiary. They need to describe the benefits provided under the plan or health insurance coverage, as well as include contact information for questions and complaints. Any plan sponsor that fails to provide this annual notice will be determined to have forfeited grand-fathered plan status. Employers are encouraged to use the language at bitly.com/qrgrandfather to satisfy this requirement to maintain grandfathered plan status.
Plans existing on or before March 23, 2010, aren’t required to comply with certain health care reform mandates, such as providing internal and external claims appeal processes.
IRS Form W-2 Reporting
Health care reform requires employers that sponsor group health plans for their employees to report the cost of coverage – the portions paid by both employer and employee. The cost generally continues to be nontaxable to employees. Employers not subject to transitional relief need to report health plan costs in Box 12, using code DD on the Internal Revenue Service Form W-2.
Employers that issued fewer than 250 W-2s in the prior year are not required to report group health plan costs until the Internal Revenue Service issues future guidance. Employers must be given at least six months’ advance notice of any change to this transitional relief. Also, employers are not required to report the cost of coverage on any midyear W-2 issued to an employee who terminates employment before plan year-end.
Summary of Benefits and Coverage
The law requires plan administrators to produce an annual Summary of Benefits and Coverage (SBC). An SBC is intended to be an easy-to-understand document that includes the following elements:
» A description of coverage for each category of benefits, exceptions, reductions or limitations.
» Cost-sharing provisions of coverage; deductible, coinsurance and copayment obligations.
» Renewability and continuation of coverage provisions.
» A coverage facts label or coverage examples.
» A statement that the SBC is only a summary and that the plan document, policy or certificate of insurance will govern contractual provisions of coverage.
» A contact number to call with questions and a web address where a copy of the actual individual coverage policy or group certificate of coverage can be obtained and reviewed.
» Contact information to obtain a list of network providers, an Internet address where an individual may find more information about prescription drug coverage and the Uniform Glossary.
The law states that participants, beneficiaries and prospective enrollees must receive an SBC with initial enrollment materials and, in most circumstances, annually at least 30 days prior to the first day of coverage for a new plan year. Additionally, administrators must furnish an SBC within seven business days to any participant or beneficiary who requests one.
IRS Form 720
Beginning in 2013, health insurance issuers and sponsors of self-funded employee benefit plans began to calculate, report and pay Patient-Centered Outcome Research Institute (PCORI) fees. PCORI helps fund a quasi-governmental entity to monitor and report on the effectiveness and outcomes of medical treatment.
The fee is based on the number of covered lives under a plan, multiplied by a stated dollar amount, which is $2 (# of lives x $2). Although insurance carriers must file Form 720 and pay the fee for insured plans, such plan sponsors should coordinate with their respective carriers to ensure compliance.
There are many health care reform notice reporting requirements with which employers and group health plan administrators must comply in 2014. It’s important to alert them to these changes that certainly lie ahead as lawmakers tangle over implementation of the law.