Health care reform will change approach for all employers

The Patient Protection and Affordable Care Act (ACA), also known as Obamacare is moving ahead towards the ultimate goal of providing affordable care to all U.S. citizens. With the election over, insurance agents and employers are preparing themselves for changes that will affect them and their employees over the next several years. This briefing is intended as an overall guideline of what to expect in 2013, 2014, and beyond.

Some aspects to this new law are unfolding and will continue to do so. In items below where “awaiting further guidance” is noted, more information will be made available as we navigate these new waters.

This outline is intended as a “big picture” overview, but we will follow up with specifics regarding full-time vs. part-time employees, implementation, next steps and more. Please contact your Partnership Manager with individual concerns or questions and we’ll work through them as we go.

2012 – As we draw close to the closing of 2012, we will summarize the changes that have already occurred since the ACA was passed in 2010:

  • Dependent coverage up to age 26
  • Pre-existing conditions exclusionary period removed from all dependents and subscribers under the age of 19
  • Preventive services are covered 100% with no co-pays or deductibles
  • Lifetime dollar limits are eliminated as are annual limits on cost of essential benefits (Preventive Care)
  • Penalty increased to 20% for early withdrawal or use for non-qualified items from HSA accounts
  • Uniform summaries of benefits for all plans (Sept. 23, 2012)
  • Medical loss ratio rebates to be given for any plans not passing the claims to premium percentage requirement

2013 – Some changes will occur in 2013, but we’re still a year away from THE BIG changes that will go into effect Jan. 1, 2014. Here’s what to expect next year:

  • Patient Centered Outcomes Research Fee (aka Comparative Effectiveness Fee):
    • This technically goes into effect Oct. 1, 2012 which is the start of the federal government’s 2013fiscal year. For 2013, the fee will be $1 per average number of covered lives. For 2014 – 2019, the fee will be $2 with possible indexing for inflation. The fee will be paid by the insurance carrier for all fully insured plans (Oct. 1, 2012)\
  • Reporting of cost of health insurance on 2012 W-2 forms:
    • For employers who issue 250 or more W-2 forms for tax year 2012, the cost of health insurance paid for the employee by the employer must be reported on the employee’s W-2 form. This box will be for the employee’s information only. The amount will not affect their taxable wage. (Jan. 1, 2013)
  • Medical Flexible Spending Accounts (FSA) limited to offering $2,500 per calendar year for eligible employees. (Jan. 1,2013)
  • Increased allowance for medical expenses as itemized deductions on taxes:
  • Increases from 7.5% to 10%
  • Medicare Part A tax on wages increases from 1.4% to 2.35% for individuals earning more than $200,000 and married couples filing jointly earning more than $250,000. Employers are not required to pay the additional 0 .95%.

2014 – Jan. 1, 2014 is the scheduled date for the heart of ACA to go into effect.

  • Jan. 1, 2014 is the date Health Insurance Exchanges open for business.
    1. Available to individuals and small businesses (50 or fewer full time/full time equivalent employees)
  • Individual mandate for all individuals not covered under an employer-sponsored plan to enroll in an Exchange health plan or pay tax penalty
  • Employers with 50 or more employees will be required to provide a health plan providing essential benefits or else pay a penalty of $2,000 per full-time/full-time-equivalent employee per year, minus the first 30 FT/FTE employees (awaiting guidance on definition of essential benefits)
  • Full-time employees defined as 30+ hours per week (awaiting guidance on full-time definition)
  • Full-Time-Equivalent employees calculated as follows:
  • Calculate the aggregate number of hours of service (but not more than 120 hours of service for any employee) for all employees who were not full-time employees for that month.
  • Divide the total hours of service in step (1) by 120. This is the number of FTEs for the calendar month.
  • Elimination of pre-existing conditions exclusionary periods
  • Increasing eligibility for Medicare (contingent on State compliance)
  • Elimination of lifetime and annual limits on essential health benefits (awaiting guidance on definition of essential health benefits)
  • Prohibition of health insurers denying individual coverage or increasing individual rates based on health conditions
  • Setting the maximum allowed waiting period for benefit effective dates to 90 days from the employee’s start date.
  • Emergency room treatment must be covered at in-network level, even if services are rendered in an out-of-network hospital or facility. Allows facilities to balance bill for services
  • Employee auto enrollment required for employers with 200+ employees

2018 – 40% excise tax on “Cadillac” plans. Guidance not provided at this time.

BCN Services will continue to monitor PPACA and provide guidance to your company and your staff. If you have any questions please feel free to contact your Partnership Manager.




Frank Lewandowski, Partnership Manager

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