Employers making plans for health plan design and enrollment for 2012 and beyond need to know what's new under Federal Health Reform.   Take a quick look at the news below, click on the links to see more detail, or call a member of Frost Brown Todd’s employee benefits and executive compensation team with questions. 

Breaking NewsRules Issued on Required 4-Page Summary of Plan Benefits

The IRS, DOL and HHS jointly issued proposed standards for the new 4-page summary of plan benefits and coverage ("SBC").  Effective March 23, 2012, employees and eligible dependents are to receive the new SBC--although insurers are already advocating delay, since the government issued these standards 5 months later than scheduled, cutting into employer and insurer time to comply. 

Employers will need to provide the SBC to employees annually with open enrollment materials, to new hires, to HIPAA special enrollees, to eligible dependents, and any time upon request.  Insurance carriers are required to provide the SBC to employers with annual renewal information and any time the information changes.  Insurers and employers each have an obligation to distribute the SBC to health plan participants, including 60 days advance notice of mid-plan year changes to things covered by a SBC. 

For more information on the SBC, including what it must contain and penalties for noncompliance, click here

Breaking NewsEmployers Do NOT Have to Provide the 4-Page Summary 60 Days Before Each Plan Year 

The new rules on the 4-page SBC are a relief in one respect.  The health reform law linked a requirement for 60 days advance notice of any health plan change to the SBC disclosure, and employers had been concerned that they would be required to make decisions and announce any plan changes for a plan year at least 60 days before the beginning of the plan year.  Yet, for most employers, the insurance renewal process is not completed early enough to give 60 days' notice and material changes are common at renewal. 

Fortunately, the new rules only require 60 days advance notice of plan changes that occur other than at open enrollment.  Employers are required to provide the new 4-page SBC with any open enrollment materials that are distributed, at least 30 days before the plan year begins if renewal is automatic.  The SBC is required to be updated and redistributed 60 days in advance of any change to the SBC that occurs mid-year plan – whether that change is beneficial or an erosion in coverage. 

For more information on how and when the SBC must be delivered, click here

Medicare Part D Enrollment Period Starts Earlier; Employee Notice of Creditable Coverage is Now Required Earlier 

The Medicare Part D annual enrollment period was changed by health reform to begin earlier--October 15, rather than November 15--and end earlier than previously, on December 7, rather than December 31.  This change accelerates the deadline for employers to deliver the annual Notice of Creditable Coverage to October 15.  While the employer Notice technically only has to be given to individuals eligible for Medicare, most employers provide this notice to all employees because they do not know which employees or dependents might also have Medicare coverage.

The timing of the employer on-line creditable coverage report to CMS is the same—it is due 60 days after the beginning of each plan year.   

Planning for 2012

  • The 4-page SBC must be ready for distribution by March 23, 2012 (unless the deadline is extended).
  • Employers must begin capturing data on health plan coverage by month in 2012 so each employee's coverage value can be reported on their W-2 in January 2013.   Click here for Frost Brown Todd's Fact Sheet on the new W-2 reporting rules.
  • Health reform added more stringent claims procedure rules for non-grandfathered health plans and additional rules on the content of claims denial notices, effective in 2012.  Make sure your service providers are dealing with these rules.
  • An annual fee on medical insurance will be implemented in 2012 to fund a federal program on comparative effectiveness research.  This fee is $1 per participant in 2012 and increases to $2 per participant after 2012 and until 2019. 
  • Expanded 1099 reporting REPEALED!  Under the expanded Form 1099 reporting requirement, employers would have had to report payments to corporations, "amounts in consideration of property," and "other gross proceeds" made in the course of a trade or business, beginning in 2012.  The prior requirements to report payments of $600 or more for nonemployee compensation made by a trade or business, and certain payments to corporations are still in effect.

Planning for 2013 and Beyond

  • New rules were recently issued defining women's preventative services that must be covered.  For plan years beginning after August 1, 2012 (January 1, 2013 for calendar year plans), non-grandfathered health plans must provide the following categories of woman's services without any cost sharing: well-woman visits, gestational diabetes screening, HPV DNA testing, sexually transmitted infection counseling, HIV screening and counseling, FDA-approved contraception methods and contraceptive counseling, breastfeeding support, supplies and counseling, and domestic violence screening and counseling. 
  • Medical flexible spending account contributions are capped at $2,500 in taxable years starting in 2013 and later, although there are still proposals to repeal this provision of health reform.
  • Effective March 1, 2013, employers must provide employees written notice (i) of the existence of the state health insurance exchange; (ii) of their potential eligibility for federal assistance if the employer’s plan is “unaffordable”; and (iii) that they may lose the employer’s contribution to health coverage if they purchase health insurance through the state health insurance exchange. We are still waiting for more guidance regarding this notice requirement.
  • The health care voucher program that would have been effective in 2014 has been repealed.  Under the voucher program, employers that offered health coverage and paid a portion of the cost of the coverage would have been required to provide certain qualified employees with a voucher that they could use to purchase coverage through a state health insurance exchange.