HEALTH CARE REFORM:Top Ten Things Every

Employer Should Know

presented by:Robyn Rusignuolo / Modern Business Associates

September 30, 2010

DISCLAIMER

This seminar is not intended to provide tax, insurance or legal advice. No action should be taken in reliance upon information provided.

Legal counsel should be consulted prior to making significant tax, health care-or benefits-related decisions.

• The Patient Protection & Affordable Care Act and the Health Care& Education Affordability Reconciliation Act of 2010 were (barely) signed into law in March 2010.

• Since 1999, employment-based health insurance premiums have increased 120%, compared to inflation of 44% and wage growth of 29% during the same period.

• Small businesses on average pay 18% more than big businesses for the same health insurance policies.

• Employer-sponsored plans cover 159 million people (52% of Americans).

• Most of the provisions do not take place until 2014, but….

Who Said That?

“All of you exercise freaks, you’re the ones putting stress on the

health care system…”

10. www.healthcare.gov• As part of the reforms mandated by health care legislation,

the federal government launched healthcare.gov in July 2010.

• Focuses on explaining health care reform, giving advice, and providing various health insurance options.

• Biggest single resource for employers and employees.• Specific link for employers, and also for small businesses.• Provides a comprehensive timeline and detailed explanation

of provisions. • First central database of coverage options—it even provides

links for you to access state-specific information. • Consumers can compare plan prices.

9.

www.healthcare.gov

9. The September 23, 2010Enactments

• Recently enacted provisions include significant limitations on insurance companies and new rights for consumers.

• Elimination of lifetime limits.• Phase-out of annual limits.• Young adults can stay on their parents’ plan until age 26.• Children with pre-existing conditions cannot be denied

coverage.• Insurance companies cannot rescind or cancel coverage

if you get sick, except in limited circumstances.

9. The September 23, 2010Enactments

• Consumers receive certain free preventive care (immunizations, mammograms, preventative tests, blood pressure screenings, etc.).

• Easier and guaranteed appeals process for denied claims.

• Easier access for OB/GYN services and when choosing primary care doctors.

• No penalties for using out-of-network ERs in the event of an emergency.

• If your plan year starts January 1, that is when the these changes take effect.

8. Small Business TaxCredit

• The Small Business Health Care Tax Credit took effect immediately upon the passage of health care reform.

• Approximately 4 million small businesses can take advantage of the credit.

• Specifically targeted for employers with low- to moderate-income workers.

• Can be applied to health, dental and vision benefit premiums.

8. Small Business TaxCredit

• Limited to employers with fewer than 25 full-time workers and average annual wages of less than $50,000. (Two part-time workers count as one full-time worker.)

• Applies to employers that pay for at least 50% of single insurance coverage for their employees.

• Worth up to 35% of premium costs, and up to 50% by 2014.• Determine whether and to what extent you are eligible at

http://www.irs.gov/pub/irs-utl/3_simple_steps.pdf.

Who Said That?

"It may not happen in my lifetime, or DickCheney's, but hopefully by Easter..."

(On March 20, 2010, regarding whether Democrats could actually pass health care reform. Easter was

on April 4th.)

7. Implementation of the Law Is Still Under Development

• Pass now, ask questions later.• Interpretation and specifics of the majority of provisions are

unknown. • Various government agencies have been tasked with

drafting rules and regulations (Department of Labor, Department of Health and Human Services, etc.).

• New rules and regulations are constantly being released. • The burden is on employers to remain informed.• Remember…healthcare.gov is a great resource for

employers.

6. Employee WellnessProgram Reform

• Serious shift favoring the creation and promotion of wellness programs.• Research shows wellness programs have various workplace benefits,

including decreasing health care costs, increasing employee morale and productivity, and reducing illness and absenteeism.

• Substantial small business wellness grants are available to employers.• $200 million has been designated to award grants to employers with under 100

employees who establish new comprehensive workplace wellness programs between 2011 and 2015. (Employers with existing wellness programs as of March 23, 2010 are not eligible.)

• The Department of Health and Human Services is developing criteria for the programs, but the program must include components such as healthawareness initiatives, initiatives to change unhealthy behaviors and lifestyles, and workplace policies to encourage healthy eating, increased physical activity, etc.

6. Employee WellnessProgram Reform

• Larger health plan premium discounts are available for employee participation in wellness programs.

• For plan years beginning on or after January 1, 2014, employers can offer discounts of up to 30% of the cost of premiums under the plan to employees who participate in wellness programs that require the employee to satisfy a specific health standard. (Discount may be increased to 50%.)

• No later than March 23, 2012, and on a regular basis thereafter, the Center for Disease Control must conduct a national survey to assess employer-based health policies and wellness programs and then submit reports to Congress with recommendations for the implementation of effective employer-based health policies and programs.

5. Break Times and LocationsRequired for Nursing Mothers

• New law enforced by the Department of Labor.• Employers must provide employees with the ability to take

breaks for a “reasonable” amount of time, and as frequently as needed, for the purpose of expressing milk for nursing infants up to one year old.

• Unpaid breaks are required for non-exempt employees only; however, exempt employees may be entitled to breaks under state law.

• Employers must provide a private area for this purpose that is shielded from and free from intrusion by coworkers (bathrooms are specifically excluded).

5. Break Times and LocationsRequired for Nursing Mothers

• Employers with less than 50 employees are excluded from the new requirements only if they can demonstrate that compliance would create an “undue hardship” by causing significant difficulty or expense when considered in relation tothe employer’s size, financial resources, nature or physical structure.

• The DOL is expected to issue guidelines that define what constitutes a “reasonable” break time.

• Compliance is encouraged to the greatest extent possible. • It only takes one DOL complaint to open a Pandora’s Box…

4. Pay-or-Play

• Automatic Enrollment Mandate: Beginning March 1, 2013, employers with more than 200 employees must automatically enroll employees in their group health plan. Employees can opt out or pay a penalty.

• Employer-provided coverage mandate: Employers with 50 or more full-time employees must provide “minimum essential coverage” to employees working over 30 hours a week.– Minimum essential coverage not yet defined, but employers must provide

at least 60% of such coverage.– Employee cost cannot exceed 9.5% of an employee’s household income.

• Beginning on January 1, 2014, any employer who fails to provide required coverage will be assessed tax penalties of up to $2,000 per full-time employee.

4. Pay-or-Play• Free Rider Penalties: If any employee’s cost of coverage exceeds

9.5% of household income, and an employee purchases through a state exchange, the employer will be subject to a “Free Rider Penalty.”– Must pay lesser of $3,000 per employee purchasing through an exchange

or $2,000 per employee.• Free Choice Voucher: If an employee’s income is below 400% of the

poverty level (around $88,000 for a family of four) and the cost of coverage exceeds 8% of household income, the employer must offera “free choice voucher.”– The voucher will purchase coverage through a state exchange offering

the amount the employer would have paid to cover that employee under the most generous option in the employer-provided plan.

– If cheaper, the employer must pay the exchange and the employee will retain excess funds.

Who Said That?

“The health care bill was introducedyesterday. It's 1,990 pages long and

costs $894 billion dollars. Or $2.2million per word. That makes themthe most expensive words to come

out of Washington...’”

3. FSA, HSA and HRA Changes• Starting in 2013, Flexible Spending Account (FSA)

contributions will be capped at $2,500.• Taxes on non-medical withdrawals from Health Savings

Accounts (HSAs) will be increased to 20% (from 10%) beginning January 1, 2011.

• For tax years beginning on or after January 1, 2011, employees cannot purchase over-the-counter, nonprescription drugs on a pre-tax basis.

• Reimbursements under a FSA or Health Reimbursement Agreement (HRA) are permitted for health care expenses of children until the end of the year in which a child turns 26.

2. Statewide Health InsuranceExchanges

• For companies with up to 100 employees.• Starting in 2014, eligible companies can pool

buying power and purchase insurance through a state exchange (no national exchanges).

• Provides more choice, lowers prices, and increases small business bargaining power.

• Employers with employees nationwide must buy separate policies from separate state exchanges or participate with a “Health Care Choice Compact” (beginning in 2016).

1. Don’t Go It Alone…• Get an insurance agent working for you and your

business (after all, that is what their commission is for!). – An agent can keep you advised of developments and may help

you remain in complaint.– An agent will likely be able to keep your costs down and assist

with size- and industry-specific plans and initiatives.

• Be proactive, not reactive.– In addition to healthcare.gov, there are numerous other

resources (the IFA, SBA, trade organizations, websites, etc.) tokeep you up-to-date.

– Keep your employees informed.

Health Care Reform:BONUS!

• A specific provision was created to address corporate transparency.

• Designed to increase consumer confidence.• Insurance companies must post financial data,

including balance sheets.• Executive compensation must also be publicly

disclosed.

ANY QUESTIONS?