Health Care Reform Today
January 01, 2014
2014: The big year is finally here. Or is it?
By: Kathy Vaccaro, VP Health Care Reform
When the Patient Protection and Affordable Care Act (PPACA) was signed into law in 2010 we expected many of the major provisions to be implemented by 2014. The opening of the Health Insurance Marketplaces was really the culmination of many sweeping changes driven by the law. While many provisions have been implemented, there have been delays the past six months for several impactful provisions. In some cases the delay reflects the Administration’s recognition that more implementation time is needed.
So with that in mind, let’s review what’s actually taking shape for 2014, along with a few provisions that have seen delays in their effective dates.
Employer Mandate Delayed Until 2015
Of course, the most significant change we’ve seen is the delay of the “Employer Mandate” from 2014 until 2015. Employers potentially impacted by this new set of rules now have a bit more breathing room.
Companies with 50 or more full-time and full-time equivalent employees now have until January 1, 2015 to offer coverage that meets the affordability and minimum value standards. If coverage meeting these standards is not offered to full-time employees who work at least 30 hours a week and their dependent children up to age 26, the company could face penalties beginning in 2015.
It’s still unclear whether the Employer Mandate will apply to non-calendar-year plans immediately on January 1, 2015. In the absence of regulatory guidance, employers with non-calendar year plans should consider complying with the Employer Mandate with their plan year beginning in 2014 to avoid having to make mid-plan year changes on January 1.
As a result of the one-year delay in the Employer Mandate, the IRS also delayed for one year the reporting required by large employers subject to the Employer Mandate. Starting in 2015, employers will report details regarding their compliance with the mandate to the IRS and their employees. We are still awaiting final guidance on the specifics on how such information must be submitted.
Other Employer Responsibilities
Implementation of the auto-enrollment requirement applicable to employers with more than 200 full-time employees has also been delayed. Based upon what we know, this provision requires these employers to automatically enroll, or re-enroll all full-time employees, unless the employees indicate otherwise. A Department of Labor FAQ indicated that automatic enrollment will not go into effect until regulations are issued – which we are now expecting sometime in 2014.
PPACA also requires that entities providing minimum essential coverage, such as insurers and employers sponsoring self-funded health plans, provide information to the IRS and the covered individuals. In September, the Treasury Department announced the delay of this reporting requirement from 2014 to 2015, and that reporting for the 2014 calendar year is optional.
These reporting provisions will serve to assist the government in determining the impact of the Employer Mandate, as well as individuals’ eligibility for the federal premium tax credits available through the Health Insurance Marketplaces. While in their formative phase, these provisions will create additional administrative responsibilities for employers starting in 2015. We urge you to stay tuned for more details on all these employer responsibilities in 2014.
Health Insurance Marketplace Rollout
Despite the well-publicized problems with the online enrollment process, the implementation of the Health Insurance Marketplaces is moving forward – with two modifications.
Individuals who enroll in a plan through the Marketplace in late March of 2014, during the extended initial open enrollment period, will not have coverage until May 1. However, such enrollees will not have to pay a penalty under the Individual Mandate in 2014, even though they may be without coverage for more than three months. They will be able to claim a hardship exemption from the Individual Mandate penalty.
The other change relates to the Small Business Health Option Program (SHOP) Marketplace. For states whose SHOP Marketplace is operated by the federal government, online enrollment and employer choice will not be available until 2015. Small businesses can still compare plans online, and other alternatives are available for enrollment in 2014. Beginning in 2015, the employee choice option will allow small employers to determine how much they will contribute toward the cost of employee coverage and offer their employees a choice of Marketplace plans from different carriers at a certain level (Bronze, Silver, etc.).
Changes in the Individual and Small Group Markets
In November, the Administration announced a “fix” intended to address concerns for individuals whose current coverage was being cancelled due to their current plan’s non-compliance with the 2014 PPACA requirements. Under the proposed “fix,” the states could allow insurers to renew certain individual and small group health plans for 2014 without having to be compliant. This extension is available only for policies in effect on October 1, 2013. The “fix” does not allow the sale of new non-compliant policies. Not all states have agreed to permit insurers to extend coverage in accordance with the proposed “fix.” Cigna was well positioned before this “fix,” as we had previously worked through satisfactory solutions for 99% of our individual customers, and we continue to work with the remaining 1% to find viable alternatives.
What’s Taking Effect in 2014
Now that we’re all caught up on the delays, let’s take a look at some of the key provisions that are taking effect in 2014, as originally planned. I would encourage you to take a look at our interactive Timeline for more details.
- Essential health benefits
- Cost-sharing limits
- No pre-existing conditions for all ages
- No annual dollar limits on essential health benefits
- Wellness program incentives
- Guaranteed availability and renewability
- 90-day maximum waiting period
- Health insurance industry fee on insurers
- Reinsurance fee on insured and self-insured plans
Keeping You Informed on Reform
As additional guidance and clarification is provided, you can count on Cigna to help you stay ahead of the curve. We encourage you to visit and bookmark InformedOnReform.com, our comprehensive website for news and insights on emerging issues and concerns relating to PPACA. The site also includes convenient tools such as our interactive timeline and the consumer-friendly Health Care Reform for YOU, which outlines what reform may mean for an individual based on answers to a few quick questions.
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