On June 28, 2012, the United States Supreme Court issued its landmark decision on the constitutionality of the Patient Protection and Affordable Care Act (“Act”), and ruled that all of the challenged health care reform provisions in the Act are constitutional other than a portion of a Medicaid expansion provision. Although future challenges to the implementation of some or all of the Act will occur through the electoral process, additional litigation, and the legislative process, those challenges are unlikely to result in any significant changes in the requirements of the Act before the end of this year at the earliest. In the meantime, there are a number of new requirements in the Act that covered employers will need to comply with in the near future, including:
- finalizing the Summary of Benefits and Coverage that most employers will be required to provide on the first day of open enrollment this fall;
- taking the steps necessary to comply with the $2,500 annual limit that will apply to health flexible spending accounts beginning in 2013, including making sure that open enrollment materials that will be distributed to eligible employees prior to the beginning of the 2013 plan year accurately describe the new limit;
- implementing any procedures necessary to track and record health coverage costs in 2012 to prepare for the new Form W-2 reporting requirement for group health plan coverage costs that will apply to Forms W-2 that will be issued by certain employers in January of 2013; and
- coordinating with any applicable insurer or administrator to make sure that the research fees that will be imposed by the Act on specified issuers of health insurance policies and plan sponsors of self-insured health plans starting with the first plan or policy year ending on or after October 1, 2012 are timely paid in 2013.
In addition to these requirements, the Act will impose numerous other requirements on covered employers in the next few years that should be planned for in advance of the applicable deadlines. Some of the more important of those requirements are described below:
- preventive care requirements for women that certain health plans will have to implement starting with plan years that begin on or after August 1, 2012;
- medical loss ratio rebate requirements that will apply to certain insured health plans starting in August of 2012 (certain insurers that fail to spend a specified percentage of premiums received on covered medical claims and quality improvement-expenses will have to provide rebates to the applicable health plans starting in August of 2012, and employers that have such plans will have to decide how to handle such rebates);
- 2013 increases in Medicare payroll taxes and FICA taxes for certain highly compensated individuals;
- certain employers will be required to provide a notice to their employees in March of 2013 about the health insurance exchanges that will become operational in 2014 (in addition to this notice requirement, certain employers will want to do an analysis in 2013 about how the health insurance exchanges might impact the health coverage they provide);
- the employer mandate requirement (commonly referred to as the “pay or play” requirement) that will apply in 2014 to certain employers having at least 50 full-time equivalent employees, which will require those employers to decide whether they will provide minimum essential health coverage to their full-time equivalent employees in 2014 or pay a financial penalty;
- nondiscrimination requirements for certain insured group health plans that will apply after the applicable regulations are issued; and
- numerous other requirements that will apply to many group health plans in 2014 or later, including expanded dependent coverage rules for “grandfathered” health plans, new preexisting condition exclusion requirements, a restriction on eligibility waiting periods that exceed 90 days, a requirement to eliminate all annual dollar limits for covered group health plans, new incentive/penalty requirements for wellness incentives, new minimum essential coverage requirements, new clinical trial coverage requirements, new provisions regarding guaranteed availability and renewability of insured health coverages, changes to Medicare Part D coverage, new automatic enrollment requirements that will apply to certain employers after the applicable regulations are issued, and a new “Cadillac” plan excise tax that will apply in 2018 if the aggregate value of certain health coverages exceed a specified amount.
Considerable guidance is going to be issued by the applicable governmental agencies to help employers implement the requirements described above, and that guidance should be monitored carefully to help ensure timely compliance with those requirements.