Emmer & Graeber
A LAW CORPORATION

HEALTH CARE REFORM IMPLEMENTATION TIMELINE

The President signed the Patient Protection and Affordable Care Act (PPACA) on March 23, 2010. The PPACA was amended by the Health Care and Education Affordability Reconciliation Act of 2010, which the president signed on March 30th. We created an implementation timeline of some of the key provisions of the law.

As the implementation timeline shows, some health care reform law provisions apply to “grandfathered” health plans, and some do not. It is therefore essential to determine whether your plan is grandfathered.

To determine whether a plan is grandfathered, you must look at each benefit package separately. For example, you analyze your HMO benefit option separately from your PPO benefit option. One option may lose grandfather status, while the other may maintain it.

Grandfather status is determined by looking at a benefit option as of March 23, 2010, and then determining whether any changes made to the benefit option since that time will cause it to lose grandfather status. Regulations have been issued jointly by the Department of Labor, the Department of the Treasury, and the Department of Health and Human Services explaining what changes will cause a plan to lose grandfather status.

A loss of grandfather status will occur if:
• The plan eliminates all or substantially all benefits to diagnosis or treat a particular condition.
• The plan has any increase in a percentage cost-sharing requirement (such as a coinsurance requirement).
• The plan increases a fixed-amount copayment above certain amounts.
• The plan increases a fixed-amount cost-sharing requirement other than a copayment (such as a deductible) above certain amounts. (The regulations apply different rules to copayments and all other fixed-amount cost-sharing requirements.)
• The plan decreases its contribution rate toward any tier of coverage below a certain amount.
• The plan makes certain changes in its annual limits.
• A fully insured plan changes insurance carriers.

To maintain grandfathered status, a plan must include a statement in plan materials that the plan is grandfathered, and provide contact information (model language has been provided). The plan must also maintain certain records so that it can demonstrate that it has not made any changes to plan terms that would cause a loss of grandfather status.

In Effect Now

• Retiree Reinsurance Program
• Small Employer Tax Credit
• Temporary High Risk Pool for individuals with a pre-existing condition and no coverage for 6 months
• Employers with 200 or more full-time employees must auto enroll employees (who can opt out)*

Effective for Plan Years Beginning on or after September 23, 2010
(Including Grandfathered Plans)

• No lifetime limits on “essential health benefits”
• Restricted annual limits allowed until 2014 for “essential health benefits”
• Prohibition on rescissions, except for fraud or intentional misrepresentation of a material term
• Plan must cover adult dependents up to age 26 (if the plan is grandfathered, for plan years beginning before 1/1/14, provision is only applicable if adult dependent is not eligible for other employer-sponsored coverage)
• No pre-existing condition exclusions for individuals under 19 (does not apply to grandfathered individual health insurance coverage)

Effective for Plan Years Beginning on or after September 23, 2010
(Non-Grandfathered Plans Only)

• Must cover preventive care without cost-sharing (such as copayments and deductibles)
• Fully insured plans cannot discriminate in favor of highly compensated employees under rules similar to IRC section 105(h)
• Cannot require pre-authorization for emergency services, and must have the same cost-sharing for in-network and out-of-network services
• New rules on internal claims and appeals and external review processes
• Participant must be able to designate any primary care provider available to accept the individual, or pediatrician in the case of a child
• Cannot require pre-authorization or a referral for treatment by an OB/GYN

Effective in 2011

• No reimbursement of over-the-counter drugs from FSAs, HRAs, and HSAs, unless prescribed or insulin
• Employers must report aggregate cost of employer-sponsored coverage on W-2
• Carriers must rebate amounts in excess of medical loss ratios (for 2010 and subsequent years)
• CLASS Act: Voluntary long-term care program
• Increase tax on distributions from HSAs and Archer MSAs that are not for qualified medical expenses

Effective in 2012

• Must provide participants with uniform explanation of coverage (guidance to be issued 3/11) (including grandfathered plans)
• Notices of material modifications must be provided 60 days in advance of the effective date of the modification* (including grandfathered plans)
• Plans must report on initiatives and outcomes that improve health outcomes (guidance to be issued 3/12) (does not apply to grandfathered plans)

Effective in 2013

• FSA contributions are capped at $2,500 (to be indexed)
• Employers must provide employees with notice of the Exchange and available tax credits

Effective in 2014

• No annual limits on “essential health benefits” (including grandfathered plans)
• No waiting periods of more than 90 days (including grandfathered plans)
• No pre-existing condition exclusions for all participants (including grandfathered plans)
• Amends the HIPAA nondiscrimination rules applicable to wellness programs (does not apply to grandfathered individual health insurance coverage)
• Guarantee issue and renewability of employers and individuals (does not apply to grandfathered plans)
• Limits on rating variations for individual and small group plans (does not apply to grandfathered plans)
• Annual cost-sharing limits will be imposed (does not apply to grandfathered plans)
• Plans must cover routine costs of approved clinical trials (does not apply to grandfathered plans)
• Fully insured small group and individual plans must cover essential benefits (does not apply to grandfathered plans)
• Individuals and small employers may purchase coverage through state health insurance exchanges
• Individual coverage mandate; penalty will be imposed if not covered, unless an exception applies
• Premium subsidies and cost-sharing subsidies available for certain low income individuals
• Employers must provide Free Choice Vouchers to qualifying employees
• Employers may be penalized if they do not provide health coverage, or the coverage is not affordable (does not apply to employers with fewer than 50 employees)
• Large employers must report whether they offer full-time employees essential coverage

Effective in 2015

• Employers that provide minimum essential coverage to an individual must report that fact to HHS

Effective in 2018

• “Cadillac” plans will be subject to an excise tax

* Effective date unclear; consult counsel.

This is only a brief summary of certain provisions of the health care reform law and the regulations implementing the law. The terms of the law, and the regulations implementing the law, can be detailed and complex, and this summary does not purport to cover every aspect of each law or regulation. This summary does not constitute legal advice. Employers should consult their own legal counsel concerning whether and how the law and regulations should be implemented, and whether there are other labor and employee benefit legal standards that need to be put into place or updated.