Many of the provisions of the health care reform legislation (PPACA) impose new obligations on employers generally, including tax-exempt organizations, and require modifications to employer-provided group health plans.
Although PPACA does not obligate an employer to provide health insurance coverage to its employees, as of January 1, 2014 in certain circumstances an employer may be required to pay penalties if it either does not offer coverage to its employees or if the coverage offered is too costly for employees. Certain tax-exempt organizations that provide health insurance to their employees may be eligible to take advantage of a small business health care tax credit of up to 25% of premiums paid, which is claimed on a revised Form 990-T. The amount of the credit increases to a maximum of 35% of premiums paid in 2014. Employers must comply with new information requirements which impose a responsibility to issue new plan literature and to insure that internal communications and vendor communications meet legal specifications. Additionally, starting in 2012 employers will have to report the cost of coverage under an employer-sponsored group health plan on each employee’s Form W-2, and in 2014 employers will have to fulfill new obligations to file information returns with the IRS describing the health insurance coverage provided.
Key health plan reforms include the requirement to provide dependent coverage for children up to age 26, the elimination of lifetime or annual limits on benefits, a prohibition on exclusions from coverage for pre-existing conditions, a requirement to provide “first-dollar” coverage for certain preventive services, a prohibition on rescinding coverage for a covered employee except in cases of intentional fraud or misrepresentation, and changes to FSAs and HSAs. Many of these requirements are already effective, and implementing guidance has been issued by regulatory agencies. The effective dates of other key reforms, including a prohibition on discrimination in favor of highly compensated employees, have been delayed pending further guidance.
An employer who has made no or only limited changes to its plan terms since March 23, 2010 may be eligible to grandfather its plan to avoid implementing certain of the reform provisions, provided the employer continues to meet specific requirements.
For further information, please visit the Ropes & Gray Health Reform Resource Center.