Health care reform was one of the most prominent - and polarizing - issues of the 2012 presidential election. President Obama celebrated the Patient Protection and Affordable Care Act (ACA) as a momentous achievement that extended health care to millions of Americans. Mitt Romney criticized the ACA as a federal government intrusion and promised to repeal the law once elected.
Now that President Obama has narrowly defeated Mitt Romney, what effect will Obama's victory have on health care reform? The short answer is that it appears the ACA is here to stay and employers should begin preparing for the important new obligations that are looming.
The ACA makes far-reaching changes to healthcare in the United States. These changes will affect employers in their role as sponsors of group health plans offered to employees and their dependents. Several important provisions of the ACA are already in effect, while others such as the employer "pay to play" mandate become effective in 2014. It is therefore critical for employers to understand these rules and make decisions about how to comply.
The following is a list of significant provisions affecting employers that will take effect in the near future:
- Effective for group health plans beginning on or after September 23, 2010, plans may not discriminate in favor of highly compensated employees. Enforcement of this provision has been delayed until final regulations are issued.
- Effective for the 2012 tax year, employers must include the value of employer-sponsored health coverage on an employee's Form W-2.
- Group health plans and insurers must provide each applicant and enrollee with a Summary of Benefits and Coverage (SBC). SBCs must be provided in connection with an open enrollment period starting on or after September 23, 2012.
- Effective for group health plan years beginning after December 31, 2012, contributions to flexible spending accounts are limited to $2,500 per year.
- Beginning on March 1, 2013, employers must provide all employees with written notice informing them of their health care coverage options, including information about health insurance exchanges and their possible eligibility for premium tax credits.
- Beginning January 1, 2014, all employers with at least 50-full time employees must either offer health insurance coverage to full-time employees or be subject to an annual tax equal to $2,000 for each full-time employee in excess of 30 employees (the "pay or play" mandate).
- Beginning January 1, 2014, most individuals will be required to maintain health insurance coverage or pay a tax for each month for which they do not have minimum coverage (the "individual mandate").
- Effective for plan years beginning on or after January 1, 2014, group health plans and health insurers are prohibited from excluding individuals on the basis of preexisting conditions.
- An employer with more than 200 full-time employees will be required to automatically enroll full-time employees in the employer's health benefit plan. The original effective date of 2014 has been delayed until the Department of Labor issues final regulations.
- Effective for the 2018 tax year, the ACA imposes a 40% excise tax on "Cadillac Plans," or high-cost health insurance plans that exceed maximum annual coverage amounts.
Regulatory agencies will continue to issue guidance on the various provisions above as their effective dates approach.