PPACA Ruling: An Employer’s Next Steps…
While the dust settles after the landmark decision from the Supreme Court on the Affordable Care Act (ACA), employers are now faced with trying to figure out just what it means for them. While the law may still be modified, repealed and we still don’t have all the regulations from HHS, employers still have to deal with what could happen as they begin their benefit planning for 2013 and beyond.
Below are some areas you should be thinking about as you start your benefit planning for your next plan year.
Summary of Benefits and Coverage (SBC) requirement.
This is the next administrative issue that will be facing employers. For the first open enrollment period or plan year beginning on or after September 23, 2012, employers must distribute an SBC for most of their group health plans.
Communication to Employees.
While not a specific requirement of the ACA, the fact is employees will be looking to you and your staff for information on how this will affect them. Employers should begin looking at ways to ensure that your HR staff is trained and ready to answer these questions.
Limitations on Medical Flexible Spending Accounts.
Plan years beginning on or after January 1, 2013, employee contributions to a medical flexible spending account (FSA) maintained under your Section 125 Cafeteria Plan will be limited to $2,500. Employers will need to ensure that your Cafeteria Plan Document and Employee Communication Materials are amended to reflect this change.
Medical Loss Ratio (MLR) Rebates.
In August or shortly after, many employers may receive MLR rebates from their group health insurance carriers. As a fiduciary under ERISA, most plan administrators will need to determine how to handle the disposition of these rebates. To determine if all or part of the rebate should be refunded to employees or used to benefit employees will depend on your plan document and the structure of your plan premiums.
Cost of Coverage on 2012 W-2 forms.
Employers will be required to report the total cost of any group health plan coverage that was provided to the employee on the 2012 W-2 forms to be distributed by employees by January 31, 2013. It should be noted that this cost is not taxable but merely an informational item on the W-2. Employers should be working with their payroll department and/or vendor to ensure they will have this information available.
Employer “Play or Pay” Mandate.
Employers who have 50 or more full-time employees (taking into account full-time equivalents) will be required to provide adequate and subsidized group health plan coverage to all full-time employees and their families beginning in 2014. If an employer fails to provide this coverage, it will be subject to a $2,000 per full-time employee per year penalty.
New Nondiscrimination Requirements.
PPACA prohibits most insured group health plans from discriminating in favor of highly-paid employees. If you are offering different medical plans, eligibility periods, or premium subsidies to different groups of employees, you may need to adjust your offerings to comply with these new nondiscrimination requirements. Failure to satisfy this requirement may subject an employer to significant financial penalties. This requirement has been delayed while HHS works on the regulations but we expect this will begin to apply to plans in 2014.
Employers with more than 200 employees will be required by the PPACA to automatically enroll new employees who are eligible for group health plan coverage. Employees will be able to ‘opt’ out of coverage but with this new requirement it is likely that you will see an increase in participation and consequently a rise in plan subsidy costs. Again, implementation has been delayed for further guidance but it is anticipated this will apply in 2014.
As more of the PPACA is implemented, the result is likely to be more administrative burdens for the employer and higher premium costs. Even if you decide to pay the penalty rather than continue to offer coverage, employers will still be impacted by this new law. As you are trying to ensure compliance, you can rely on BCL Systems, Inc. to be there to answer your questions and provide cost effective ways to reduce the impact on you and your staff.