Large Group Market

One of the earliest changes for non-grandfathered, employer-provided coverage will be the requirement that, beginning in plan years on or after September 23, 2010, employers pay the full cost of certain preventive services, including certain immunizations, breast cancer screenings, and other services as recommended in the future by the U.S. Preventive Services Task Force and other agencies, such as the Centers for Disease Control and Prevention.

Effective for plan years beginning on or after September 23, 2010, dependents up to age 26 will (in most cases) be allowed to remain enrolled in their parent's coverage. Grandfathered group health plans are not required to offer coverage to adult dependents who are eligible for coverage under other group coverage (such as coverage offered by their own employer).

Please note that Patient Protection and Affordable Care Act (PPACA) does not change or preempt the Massachusetts law regarding coverage of dependents to age 26, which continues to apply to insured plans. In addition, some non-grandfathered plans may have chosen to offer this extended dependent coverage earlier than the plan's renewal date. Please check with your account executive if you have any specific questions.

There are a number of other reforms included in the new law that are effective for plan years beginning on or after September 23, 2010. Some of the important additions include:

• Elimination of coverage rescissions. Canceling of a member's policy by an insurer, after the policy has been issued, is permitted only if the member committed fraud or made an intentional misrepresentation of a material fact on his or her application for health insurance. The regulations clarify that cancellation or discontinuation of coverage can be made for failure to pay premiums in a timely manner.
• No lifetime or annual limits on the dollar value of benefits. No lifetime limits or annual limits on the dollar value of "essential benefits" (to be defined in future regulation) for any group health plan participant or beneficiary. (Restricted annual limits are allowed through 2013 and are to be further defined by the Department of Health and Human Services [HHS].)
• Certain other health plan requirements. These include the provision of internal/external appeals, access to emergency services, and provisions related to pediatrician and OB/GYN choice.

Some plans may not be subject to these requirements because of their status as grandfathered plans.

Yes. Plans in existence on March 23, 2010, may choose to be grandfathered. This means that if existing group coverage is maintained, these plans do not have to comply with certain provisions of the new law. Nevertheless, even grandfathered plans must comply when certain rules go into effect on the first plan year after September 23, 2010, such as eliminating lifetime dollar limits and allowing most dependents up to age 26 to remain on their parent's policies. The law itself specifies that enrolling new employees or adding family members will not affect grandfathered status, and HHS has clarified what policy changes could alter a plan's grandfathered status.

No. However, there are financial obligations for employers with at least 50 full-time equivalent employees.

Beginning in 2014, businesses with 50 or more full-time equivalent employees that do not offer coverage, and have at least one full-time employee who receives a federal tax credit to purchase health insurance through an exchange, must pay the federal government a $2,000 per-employee penalty. In calculating the penalty, the employer excludes the first 30 employees from the payment calculation (e.g., a firm with 51 employees would pay the penalty on 21 of them).

Employers with 50 or more full-time equivalent employees that do provide coverage, but have at least one full-time employee who receives a federal tax credit to purchase health through an exchange (e.g., the employee's cost of coverage for the employer plan is greater than 9.5 percent of the employee's household income, which is determined to be "unaffordable"), will be assessed a penalty that is the lesser of $3,000 per employee receiving a tax credit, or $2,000 for each full-time employee, excluding the first 30 employees.

Yes, employers may still impose a waiting period. Beginning in 2014, the waiting period may not exceed 90 days.

No. The new law provides that employees working an average of 30 hours per week or more in a month and their dependents be eligible for coverage. Employers with 50 or more full-time equivalent employees may be subject to a penalty if they do not comply with this provision.

Starting January 1, 2018, a 40 percent excise tax will be imposed on group health insurance premiums exceeding $10,200 per year for single coverage, and $27,500 per year for any other coverage. The cost thresholds dictating the tax will be slightly higher for plans covering retirees or employees in certain high-risk industries ($11,850 per year for an individual retiree or $30,950 per year for family). (All dollar amounts are in 2010 dollars and will be adjusted for inflation before applying to "Cadillac" plans in 2018.)

In 2019, the thresholds will rise to match the increase in the Consumer Price Index (CPI), plus one percentage point. In 2020 and succeeding years, the thresholds will increase to match rises in the CPI, rounded to the nearest $50. Although this tax is on insurers (and self-funded group plans), it is possible that it will be passed on to employers and employees in the form of higher premiums. To avoid the tax, some employers may make changes to their plans.

Yes, there are several new reporting requirements for employers, including, but not limited to, the following:

• Employers must report the value of the benefits on each employee's annual W-2 form, beginning with W-2s issued in January 2013 (i.e., for tax-year 2012). Current rules for COBRA continuation of coverage should be used in calculating the value of benefits (minus the two percent allowed administrative fee, if charged). Contributions to Archer Medical Savings Accounts (Archer MSAs) and Health Savings Accounts (HSAs), as well as salary reduction contributions to Flexible Spending Accounts (FSAs), are not required to be included in determining the value of benefits.
• Beginning in March 2013, employers must provide information to employees about the exchanges.
• Beginning in 2014, employers providing minimum essential coverage must report to the IRS annually with information about the coverage offered. Employers will be required to submit the following specific information:
• The length of any waiting period
• The months during the calendar year that coverage was made available to employees
• The monthly premium for the lowest cost option for each enrollment category within the plan
• The employer's share of the total allowed costs of benefits provided under the plan
• The option for which the employer pays the largest portion of the cost of the plan, and the portion of the cost paid by the employer in each enrollment category for such option
• The name, address, and tax identification number of each full-time employee during the calendar year, and the months during which these employees (and any dependents) were covered under any health benefit plan

Also, beginning in 2014, employers providing minimum essential coverage must provide written statements to each full-time employee, listing the information bulleted above, as well as the name, address, and contact information of the employer's insurer. Statements are to be given to individuals on or before January 31 for the previous calendar year.

• Employers interested in the small business tax credit may need to submit additional information required by the Treasury Department. This information will be necessary only if the employer is eligible for the credit, and the employer's coverage is a qualified health plan offered through the exchange.

For plans that are not grandfathered, the new law generally states that coverage for emergency department services must be provided without prior authorization of services. In addition, out-of-network emergency services generally must be covered and reimbursed the same as for in-network emergency services, including any cost sharing requirement (e.g., copayments or co-insurance) for both in-network and out-of-network services.

Large businesses (more than 200 full-time employees) that offer health insurance will have to automatically enroll workers in a health plan. An employee, however, must receive adequate notice and the opportunity to opt out of this automatic enrollment. This does not supersede any state law that establishes, implements, or continues any standard or requirement relating to employers and payroll, unless the state law prevents instituting automatic enrollment.