Transcript Document

Health Care
Reform: What
Does It Mean
tFor The HR
Professional
Presented By:
Staci R. Grant, RHU
Vice President Benefits Division
7 South Warren Street
Dover, NJ 07801
973-366-0500
[email protected]
www.henryobaker.com
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The information contained herein and on handouts are issued for informational purposes only and has been collected from regulations, statutes, laws and
administrative rulings and should not be viewed as interpretation or relied upon as legal, financial or tax advice. HOB is not associated with or endorsed by
any governmental agency and information obtained from governmental agencies is subject to change. This information is known to be current as of June
2012. It is not intended to provide specific legal, tax or other professional advice. The services of an appropriate professional should be sought regarding
your individual situation.
Overview- HR in the Spotlight
Since the Supreme Court decision on the Patient
Protection and Affordable Care Act (PPACA) and even
most recently, the Presidential election outcome, for
companies and Human Resource Professionals, the
message is very clear. That message: move forward with
implementing and complying with PPACA . Many of the
regulations have taken effect and many are set to begin in
2013 and even more in 2014.
Today’s discussion will review the role of HR as we move
towards Reform head-on and what changes need to take
place. We will also review key steps that HR Professionals
may want to take to plan for 2014. Just as important,
however, before strategies can be formulated, is an
overview of the regulations, as they are written now.
Agenda
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HR’s role with Reform
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The rules of and complying with PPACA
− PPACA rules currently in place
− Future compliance deadlines
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Key steps HR can take now to plan for 2014
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Ideas to consider
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Questions
HR’s Role With Reform
In The Spotlight
Reform is difficult, changing and confusing. But, it is an opportunity to
change the HR role within a company.
Reform has opened up a path for new choices. This is a chance for HR to
lead the path with thoughtful and insightful contributions on :
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Benefits Strategy-Pay or Play, future vision of the total reward package,
types of benefits offered, vendors and delivery of benefits
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Compliance-penalties, manuals, notifications, filings, reporting
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Finance-closing the gap with CFO’s, broader workforce discussions vs.
spreadsheet driven
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Workforce Design-classifications of employees, full- time vs. part-time
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Purchasing Strategy- Direct contract with ACO, imaging providers, Rx
through Drugstore direct vs. through insurance
PPACA Rules and
Compliance-Which Plans
Must Comply
Plans Subject to Health Care
Reform
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Health care reform’s health plan rules generally
apply to group health plan coverage
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Exceptions
− Excepted benefits
− Retiree-only plans
− Group health plans covering fewer than 2 employees
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Excepted Benefits
− Accident or disability income coverage
− Separate dental and vision plans
− Liability insurance
− Some FSAs
Grandfathered Plans
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Grandfathered plan: group health plan or health
insurance coverage in which an individual was
enrolled on March 23, 2010
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Certain health care reform provisions don’t apply to
grandfathered plans, even if coverage is later
renewed
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A plan can lose grandfathered status by making too
many changes to benefits or costs
− Plans will have to analyze status and changes at each
renewal
What is the Benefit of Being a
Grandfathered Plan?
The following provisions will NOT APPLY to grandfathered plans:
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Patient Protections
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Rating limitations, essential benefits
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Nondiscrimination rules for fully-insured plans
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New appeals process
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Quality of care reporting
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Insurance premium restrictions
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Guaranteed issue and renewal of coverage
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Nondiscrimination based on health status/in health care
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Comprehensive health insurance coverage
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Limits on cost-sharing
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Coverage for clinical trials
Plans will lose Grandfathered status
if:
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Obtain new policy, certificate or contract of insurance
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Eliminate benefits for a particular condition
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Add or decrease overall annual dollar limit
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Increase coinsurance percentage
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Increase deductible or out-of-pocket max by more than
15%
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Increase co-payment by more than greater of:$5 or 15%
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Decrease employer contribution rate by more than 5%
Mandates Currently in Place
Provisions Already Effective (pre 2012)
Small employer tax credit
• Dependent coverage up to age 26
• No lifetime limits/restrictions on annual limits
• No rescissions –Carriers can’t drop a persons
coverage
• No pre-existing condition exclusions for children
• No cost-sharing for preventive care services (non-GF
plans)
• Appeals process changes (non-GF plans)
• No reimbursement for OTC medicine or drugs
(without a prescription)
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2012-2013 Compliance
Deadlines
W-2 Reporting
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Employers must report
aggregate cost of
group health plan
coverage on each
employee’s Form W-2
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Does not change the
tax rules for health
coverage – coverage
is still not taxable
Effective Date
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Then:
− Originally effective for the 2011 tax year (W-2 Forms provided
in Jan. 2012)
− IRS later made 2011 reporting optional for all employers
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Now:
− Mandatory for 2012 tax year (W-2 Forms provided in Jan.
2013) for employers issuing more than 250 W-2 Forms.
− For small employers (those that file fewer than 250 W-2 Forms),
reporting requirement is delayed until further guidance issued
− Covered employers need to be compiling data
Reporting
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Report coverage under employer-sponsored group
health plans
− Not plans that don’t provide health coverage/excepted
benefits
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Aggregate cost must be reported
− Include both employer- and employee- paid portions
− Determined under rules similar for determining “applicable
premium” under COBRA
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Not required for:
− Employees who terminate during the year and request a W-2
before the end of the year
− Employees who would not otherwise receive a W-2
Summary of Benefits and Coverage
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Non-compliance with regulations could result in a civil penalty of up to $100 per day
per affected individual; an excise tax of $100 per day per affected individual; and
fines of up to $1,000 per affected individual for willful violations.
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Simple and concise explanation of benefits
− Applies to GF and non-GF plans
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Model template and guidance available
− Instructions
− Sample language
− Uniform glossary of terms
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Compliance Deadline: Sept. 23, 2012 but special rules specify when SBC must be
provided
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Health plans:
− Open enrollment: 1st day of the 1st open enrollment period that begins on or after Sept. 23,
2012 or
− Other enrollment: 1st day of the 1st plan year that begins on or after Sept. 23, 2012
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No duplication required: if issuer provides to enrollees, plan doesn’t have to
Providing the SBC to Health Plans
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Issuers must provide SBC to health plans:
− Upon application
− Before the first day of coverage (if there have been changes
to the SBC)
− When a policy is renewed or reissued
− Upon request
Providing the SBC to Enrollees
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Plans must provide SBC to enrollees:
− For each benefit package offered or which they are eligible
− Annually at renewal (or 30 days before new plan year if
automatic renewal)
− With enrollment application materials (if no written enrollment
materials, when the participant is first eligible to enroll)
− Before the first day of coverage (if there have been changes
to the SBC)
− To special enrollees within SPD timeframe
− Electronic Delivery acceptable see http://www.ecfr.gov/cgi-
bin/ECFR?page=browse
− Upon request
What Plans Must Distribute a SBC?
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The obligation to furnish an SBC applies to a group health plan (whether insured or
self-insured) and a health insurance issuer offering group health coverage.
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A plan that offers “excepted benefits” is not required to distribute an SBC. This would
generally include a standalone dental or vision plan and most health flexible
spending arrangements (health FSAs).
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Disclosures for a health FSA that is not an excepted benefit depend on whether it is
integrated with other major medical coverage. If the health FSA is integrated with
other major medical coverage, features of the health FSA can be included in the
SBC for the major medical coverage. If the health FSA is not integrated with major
medical coverage, then it is required to furnish an SBC.
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A health reimbursement account (HRA) is a group health plan and must furnish an
SBC.
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A health savings account (HSA) is not a group health plan and is not required to
furnish an SBC. However, an SBC for a high deductible health plan can mention the
effects of any employer contributions to an HSA that can be used for deductibles,
copayments, coinsurance or other services not covered by the high deductible
health plan.
60-Day Notice Rule
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Material modifications not in connection with
renewal must be described in a summary of material
modifications (SMM) or an updated SBC
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Material modification:
− Enhancement of covered benefits or services
− Material reduction in covered benefits or services
− More stringent requirements for receipt of benefits
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Must be provided at least 60 days BEFORE
modification becomes effective
Preventive Care for Women
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New guidelines for preventive care for women on
Aug. 1, 2011
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Must provide coverage for women’s preventive
health services without any cost-sharing
− Applies to non-GF plans
− No deductible, copayment or coinsurance
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Effective for plan years beginning on or after
Aug. 1, 2012
Covered Health Services
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Well-women visits
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Gestational diabetes screening
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HPV DNA testing
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Sexually transmitted infection counseling
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HIV screening and counseling
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Breastfeeding support, supplies and counseling
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Domestic violence screening and counseling
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Contraceptives and contraceptive counseling
Medical Loss Ratio Rebates
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Issuers must provide rebates if MLR does not meet
requirements
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Rebates due Aug. 1 after reporting year
− First rebates to be paid by Aug. 1, 2012
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Rebates will go directly to policyholder (plan
sponsor)
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Rebates may be plan assets for ERISA plans
− If employees contribute to cost of coverage
− Must use rebates for the benefit of enrollees
− Example: lower premiums
Health FSA Limits
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Current limits
− No limit on salary reductions
− Many employers impose limit
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Beginning in 2013, limit is
$2500/year
− Limit is indexed for CPI for later years
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Applies to plan years beginning on or after 1/1/13
− This is a change from initial effective date
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Does not apply to dependent care FSAs
Comparative Effectiveness
Research Fees
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Patient-Centered Outcomes Research Institute
− Created to improve informed health decisions
− Research funded by a fee paid by insurers and plan sponsors of self-
funded plans-HRA’s considered self-funded health plans
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Effective date
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Who Pays and on What
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Amount of fee:
− Plan years ending after Sept. 30, 2012
− Do not apply for plan years ending after Sept. 30, 2019
− For calendar year plans – apply for 2012-2018 plan years
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On fully insured plans, carrier
Self-insured plans, plan sponsor
HRA’s are subject to fee, considered self-insured health plan
IRS Form for Excise Tax
− $1 per covered life-2013
− Increases to $2
− Indexed for CPI
New Notice Requirement –
Exchanges and Minimum Essential
Coverage
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Employers must notify new employees regarding health
care coverage
− At time of hiring
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Notice must include information about 2014 changes:
− Existence of health benefit exchange
− Potential eligibility for subsidy under exchange if employer’s
share of benefit cost is less than 60 percent
− Risk of losing employer contribution if employee buys coverage
through an exchange
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More guidance and model notice expected
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Penalties apply for non compliance of $50/missed
statement; max $100k
2014 Compliance Deadlines
Individual Mandate
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Jan. 1, 2014: All American citizens and legal residents must enroll in
qualified coverage or pay a penalty
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Penalty amount: Greater of $ amount or a % of income
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Family penalty capped at 300% of the adult flat dollar penalty or
“bronze” level premium
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Exceptions:
− 2014 = $95 or 1%
− 2015 = $325 or 2%
− 2016 = $695 or 2.5%
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Religious objectors
Illegal immigrants
Incarcerated individuals
Taxpayers with income under 100% of poverty level
Members of Indian Tribes
Those who were not covered for a period of less than three months during
the year
Health Insurance Exchanges
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HHS extends Exchange Deadline for States to December
14, 2012.
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States will receive funding to establish health insurance
exchanges or opt out and Federal Government will take
over
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Individuals and small employers (under 100) can
purchase coverage through an exchange (Qualified
Health Plans)
− In 2017, states can allow employers of any size to purchase
coverage through exchange
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Individuals can be eligible for tax credits
− Limits on income and government program eligibility
− Employer plan is unaffordable or not of minimum value
Employer Mandate?
Are employer’s required to provide insurance coverage for employees?
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No, if you are an employer with fewer than 50 full-time (30 hrs/wk+)employees.
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Probably, if you are a large employer (50 or more Full-time employees working
30+hrs/wk) subject to “Pay or Play” rule
When determining whether an employer has 50 employees:
Full-Time employees (working 30+hrs/week)
Full-Time Equivalent employees (FTEE) FTEE=total # of part-time hours for the
month/120
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Penalties apply if:
− Employer does not provide coverage to all FT employees and any FT employee gets subsidized
coverage through exchange OR
− Employer does provide coverage and any FT employee still gets subsidized coverage through
exchange
Employer Penalty Amounts
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Employers that do not offer coverage to all full-time
employees:
− $2,000 per full-time, not FTEE, employee
− Excludes first 30 employees
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Employers that offer coverage, the lesser of:
− $3,000 for each employee that receives subsidized coverage
through an exchange or
− $2,000 per full-time employee (excluding first 30 employees)
Employer Reporting
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Employers will have to report certain information to
the government
− Whether employer offers health coverage to full-time
employees and dependents
− Whether the plan imposes a waiting period
− Lowest-cost option in each enrollment category
− Employer’s share of cost of benefits
− Names and number of employees receiving health coverage
More 2014 Changes
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No pre-existing condition exclusions or limitations
− Applies to everyone and all plans
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Wellness program changes
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Limits on out-of-pocket expenses and cost-sharing
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No waiting periods over 90 days
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Coverage of clinical trial participation
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Guaranteed issue and renewal in all markets
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Individual and fully insured group policies under 100 lives must abide by
strict modified community rating standards:
− Premium variations only allowed for age, tobacco use, family composition and
geography.
− Experience rating would be prohibited.
Future Compliance
Deadlines
2018 – Cadillac Plan Tax
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40 percent excise tax on high-cost health plans
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Based on value of employer-provided health
coverage over certain limits
− $10,200 for single coverage
− $27,500 for family coverage
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To be paid by coverage providers
− Fully insured plans = health insurer
− HSA/Archer MSA = employer
− Self-insured plans/FSAs = plan administrator
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More guidance expected
Nondiscrimination Rules Coming
for Fully-Insured Plans
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Will apply to non-grandfathered plans
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Discriminating in favor of highly-compensated
employees (HCEs) will be prohibited
− Eligibility test
− Benefits test
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HCEs
− 5 highest paid officers
− More than 10% shareholder
− Highest paid 25% of all employees
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Effective date delayed for regulations
Automatic Enrollment Rules
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Will apply to large employers that offer health
benefits
− Applies to GF and non-GF plans
− Large employer = more than 200 employees
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Must automatically enroll new employees and reenroll current participants
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Adequate notice and opt-out option required
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DOL:
− Regulations will not be ready to take effect by 2014
− Employers not required to comply until regulations issued and
applicable
Key Steps To Take Now
Planning for 2014 and Beyond
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Determine the implications of whether or not to offer a health
plan.
− Health benefits are only one part of the total rewards strategy
− How will offering, or not offering, health benefits impact other talent
management and recruitment strategies
− Costs
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Perform analysis to determine if plan offered should stay
Grandfathered, if currently is
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If over 50 years, perform a qualitative analysis to determine if
existing plans meet the eligibility and affordability standards to
avoid penalties. Calculators available
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Consider cost and benefits of implementing a wellness
program. Federal grants available, possible carrier discounts
may apply.
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Analyze potential Cadillac Tax implications each year
(preparation for 2018)
Planning for 2014 and Beyond
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Consider a communication strategy for employees
and candidates
− Implementation timeline on amending employee manuals,
when communication documents should be delivered and
how, employee engagement
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Consider staffing needs in light of reform and have
open discussions with CEO and CFO about direction
of company in terms of staffing and the role it plays
with rewards package
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Create a check-list of the various requirements and
their due dates
Questions?
Thank you!
Staci R. Grant, RHU
Vice President Benefits Division
7 South Warren Street
Dover, NJ 07801
973-366-0500
[email protected]
www.henryobaker.com
This presentation is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Please
contact legal counsel for legal advice on specific situations. This presentation may not be duplicated or redistributed without
permission. © 2012 Zywave, Inc. All rights reserved.