Transcript ERISA Section 408(b)(2) Fee Disclosures: Impact on Broker

Health Care Reform
Marcia S. Wagner, Esq.
Introduction
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Legislation
◦ Patient Protection and Affordable Care Act
◦ Health Care and Education Affordability
Reconciliation Act of 2010
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Main Objectives & Consequences
◦ Increase transparency and efficiency of the
health care system
◦ Require health care coverage for individuals
◦ Provide premium subsidiaries for lower income
individuals
◦ Impose new taxes, responsibilities, and penalties
on employers and others
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Mandatory Coverage for Individuals
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Effective 2014
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Most U.S. residents must have minimum
“essential health benefits” or pay a
penalty
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Penalty:
◦ $95 or 1% of income in 2014
◦ $695 or 2.5% of income in 2016
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Premium Assistance
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Small employer subsidies
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Employees eligible if income between
100% and 400% of federal poverty level
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Cost sharing subsidy for those with
income below 200%
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American Health Benefit Exchanges
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Operational in 2014
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Offer Bronze, Silver, Gold, Platinum, and
Catastrophic Plan coverage to individuals
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Out of pocket costs reduced for lower
income individuals
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SHOP
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Insurance Market
Guaranteed Issue
 Guaranteed Renewability
 High Risk Pool
 Rating only by:
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Family structure
Community rating value of benefits
Age
Smoking
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Medicare and Medicaid
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Reduce certain Medicaid payments
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Independent Advisory Panel
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Close Medicare Part D doughnut hole
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Funding
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Additional taxes imposed on the insurance
industry:
A 40% excise tax is imposed on “Cadillac” plans
Increase Medicare portion of FICA
A 3.8% surtax is imposed in 2013 on net
investment income
Reduction of Medicare Part D premium subsides
Elimination of the deduction for expenses
attributable to the Medicare Part D subsidy
Increase in the deduction threshold on medical
expenses from 7.5% to 10%
A 10% excise tax on indoor tanning services
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Employer Group Health Plans –
Future Consideration
Employers with more than 50 employees who do
not offer minimum essential health coverage will
be assessed a fee of $2,000 per employee, with
an exception for the first 30 employees
 If contributions are in excess of 9.8% of income,
the employer will be assessed a penalty of $3,000
for each employee who receives a premium tax
credit, with an exception for the first 30
employees
 Maximum 90 day waiting period
 Employers with more than 200 employees must
automatically enroll their employees in the
employer-sponsored group health plan
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Employer Group Health Plans –
Future Consideration (continued)
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Group health plans must have “effective”
appeals processes
Employer must offer a “free choice” voucher
Health care flexible spending account plans
will be limited to $2,500
Notification requirements
◦ Uniform summary of benefits
◦ W-2 reporting
◦ Individual coverage report
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Grandfather Rules
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Definitions:
◦ A group health plan that was in existence on
March 23, 2010
◦ Identity of participants may change
◦ Each benefit package examined separately
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To maintain grandfather status, a plan must:
◦ Include a statement saying plan is a
grandfathered health plan;
◦ Maintain records that document the terms of the
plan in effect of March 23, 2010;
◦ Make records available;
◦ Provide contact information
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Grandfather Rules (continued)
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Grandfather status will be lost if the plan:
◦ Enters into a new policy, certificate, or
contact of insurance after March 23, 2010
◦ Eliminates substantially all benefits for a
specific illness
◦ Increases co-insurance or cost sharing
◦ Decreases employer contribution
percentage
◦ Imposes certain new annual limits on
benefits
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Provisions Applicable to All Plans
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Coverage for adult children
Restrictions on annual and lifetime benefit limits
Elimination of pre-existing condition exclusions
Limitation of rescissions
Over-the-counter medications
Provisions Applicable to
Non-Grandfathered Plans
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Provide free preventative care services
Participants may select primary care providers,
including pediatric care providers, and OB/GYNs
Insured group health plans will be subject to
nondiscrimination rules
Emergency care services must be provided without
prior authorization
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Coverage of Adult Children
Must make health care coverage available to
children of plan participants until age 26
 May not consider:
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Tax dependency
Residency
Student status
Marital status
Employment status
May exclude adult child who is eligible for
health coverage under another employer’s plan
 Cannot require additional contributions
because child is adult
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Coverage of Adult Children
(Continued)
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Special enrollment period
◦ For adult children who lost, or never had, coverage
◦ Enrollment period must be at least 30 days
◦ Must receive written notice of enrollment
opportunity
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Taxation
◦ No imputed income even if adult child not tax
dependent until end of tax year in which child turned
27
◦ Pre-tax contributions to cafeteria plan permitted if
plan amended
◦ Change in Status rules include adult, non-dependent
children
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Restrictions on Annual and Lifetime
Benefit Limits
No lifetime dollar limits on essential health
benefits
 Must notify individuals who reached prior
lifetime limit of 30-day opportunity to re-enroll
 Annual limits on essential health benefits must
be at least:
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◦ $750,000 per plan years beginning after September
22, 2010
◦ $1.25 million for plan years beginning after
September 22, 2011
◦ $2 million for plan years beginning after September
22, 2012
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Restrictions on Annual and Lifetime
Benefit Limits (Continued)
Annual limit applies separately to each
individual
 Annual limit cannot be offset by nonessential health benefits
 Exceptions to annual limit:
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◦ Health FSAs
◦ HSAs
◦ Mini-med or limited benefit plans
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New open enrollment period
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Pre-Existing Conditions
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Pre-existing conditions definition
Cannot impose on child under 19
Cannot impose on anyone as of 2014
Cannot exclude from coverage
Rescission
Rescission is a retroactive cancellation of
coverage
 Rescission only permitted for fraud or
intentional misrepresentation
 Thirty day notice requirement
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Over-the-Counter Medications
Effective January 1, 2011
 Applies to all non-prescribed over-thecounter medications, except insulin
 Health Care FSAs, HRAs cannot reimburse.
HSA distributions taxable
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Preventative Care Services
Cannot have cost sharing such as co-pays or
deductibles
 Preventative Care includes:
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Well baby care; mammograms; services
recommended by certain government
agencies; services to be included by HHS
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Choice of Health Care Provider and
OB/GYN Referrals
Must allow selection of any primary care
or pediatric care provider in plan’s
network
 Referral to OB/GYN not required
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Non-Discrimination Rules for Insured
Plans
Non-discrimination rules for insured plans
will be “similar” to self-funded plan rules
 IRS guidance needed
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Emergency Care Services
Must be provided without prior
authorization or regard to plan’s network
 Out-of-network and cost sharing
requirements must be the same as for innetwork
 Emergency Medical Conditions –
expectation of serious jeopardy or
impairment to bodily functions or organs
 Emergency service provider may balance
bill patient
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Penalties
$110 per day penalty for failure to
provide compliant SPD
 HIPAA Penalties:
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◦ $100 to $50,000 based on number and nature
of violations
◦ Maximum penalty $1,500,000 per year
◦ Separate violation occurs on each day of noncompliance
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Conclusion – Action Steps for
Employers
Determine if you are a grandfathered plan
 Assess plan with regards to new requirements
 Prepare in advance for:
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Required open enrollments
Plan amendments
New required communication materials and notices
Revisions of summary plan descriptions and new
summaries of material modifications
◦ Keep Alert! Government agencies will be issuing
additional regulations and revising those that have
already been issued
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Marcia S. Wagner, Esq.
99 Summer Street, 13th Floor
Boston, MA 02110
Tel: (617) 357-5200 Fax: (617) 357-5250
Website: www.erisa-lawyers.com
[email protected]
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