Large Group Market

2012 & Beyond

2011

2010

Implementation Date¹	Provision	Summary
Effective for compensation paid in taxable years beginning in 2012, with respect to services performed after 2009	Insurers' Executive Compensation	Limit on deductibility of $500,000 for compensation for officers, directors, employees, and service providers of health insurers for any taxable year beginning after December 31, 2012, with respect to services after 2009.
2012	Limiting Flexible Spending Arrangements Under Cafeteria Plans	Salary reductions by an employee for a taxable year for purposes of coverage under a Flexible Spending Arrangement (FSA) under a cafeteria plan are limited to $2,500. For taxable years beginning after December 31, 2013, the dollar amount will be increased by a cost-of-living adjustment.
2013	Administrative Simplification	Requires adoption of consistent HIPAA transaction operating rules for eligibility verification and claims status transactions no later than January 1, 2011, and no later than July 1, 2012 for electronic funds transfer (EFT) and claims remittance transactions.
2014	Exchange	State-based exchanges are to be established no later than January 1, 2014.
2014	Employer Mandate	Employers with more than 50 employees who do not offer coverage, and have at least one full-time employee who receives premium tax credits, will be assessed a fee of $2,000 per year for every full-time employee beyond the first 30 employees. Employers who have more than 50 employees and who offer coverage, but have one full-time employee receiving premium tax credits, will be required to pay a fee of $3,000 per year for each employee receiving premium credits. A large group is defined as at least 50 full-time equivalent employees.
2014	Minimum Creditable Coverage (MCC)	"Bronze" benefit category must be equal to the actuarial equivalent to 60 percent of the full actuarial value of the benefit provided under the essential benefits package. Regulations to be issued. Please note that this is different than the Massachusetts MCC requirement.
2014	Essential Benefits Package	An "essential benefits" package is required for individual and small group markets. (Grandfathered plans excluded.)
2014	Insurance Reform - Rating Rules	Elimination of all rating factors other than age, geography, tobacco use, and whether coverage is for individual or family. Variation in rating for age cannot exceed 3:1 for adults, and variation in rating for tobacco use cannot exceed 5:1. All rating rules apply to individual and small group markets. Rating restrictions will also apply to large groups in states that offer large group coverage through an exchange. A large group is 101 or more employees. (Grandfathered plans excluded.)
2014	Pooling	Requires states to include self-employed and employers up to 100 employees in small group markets. States have option to keep small group as 1-50 until 2016. Requires insurers to treat individual and small groups as separate risk pools, but permits states to merge markets. (Grandfathered plans excluded.)
2014	Counting Part-Time Workers in Setting the Threshold for Employer Responsibility	In determining whether an employer qualifies as a large employer, the total number of hours worked in a month by part-time employees, divided by 120, will be added to the number of full-time employees.
2014	Premium Subsidy Eligibility	Tax credits are provided to help pay for insurance and are available for people with incomes between 100 percent and 400 percent of the federal poverty level.
2014-2016	Reinsurance Program	Creates a temporary reinsurance program, which will collect payments from health plans, including insured and self-funded plans, and provide payments to plans in the individual market that cover high-risk individuals. Health plans are to contribute $25 billion or more over three years (2014-2016).
2014 for Employers with <100 Employees 2017 for Employers with >100 Employees.	Employer Eligibility and Employer Choice	Creates Small Business Health Options Program (SHOP) exchanges, and makes employers with 100 or fewer employees eligible to purchase coverage through the new exchanges starting in 2014. Starting in 2017, states may elect to permit businesses with more than 100 employees to purchase health insurance through the exchanges.
2018	Cadillac Tax	Imposes a 40 percent excise tax on group health insurance premiums exceeding $10,200 per year for single coverage, and $27,500 per year for any other coverage (amounts will be adjusted for inflation).

Implementation Date¹	Provision	Summary
2011	Health Savings Account (HSA)	The additional tax on distributions from an HSA that are not used for qualified medical expenses is increased from 10 to 20 percent (and from 15 to 20 percent for Medical Spending Accounts) of the disbursed amount.
2011	Distributions for Medicine (Only for Prescribed Drugs or Insulin)	Eliminates the ability to use a HSA, an Archer Medical Savings Account (MSA), a Flexible Spending Arrangement(FSA), or a Health Reimbursement Arrangement (HRA) for over-the-counter drugs.

Implementation Date¹	Provision	Summary
3/23/10	No Preexisting Condition for Children Under 19	Prohibits group health plans and insurers from excluding coverage for preexisting health conditions. (Grandfathered individual plans excluded.)
3/23/10	Federal Rate Reporting	Requires insurers to submit justifications for "unreasonable" rate increases prior to implementation, and post such information on their websites. Applies to all individual, small group, and large group insured coverage. (Grandfathered plans not excluded.)
6/1/10	Temporary Reinsurance for Early Retirees	Provides $5 billion in federal grants to help employers offer group health coverage to early retirees ages 55-64 who are not Medicare eligible.
7/1/10	Health and Human Services (HHS) Internet Portal	Calls for HHS websites through which a resident of any state may identify health insurance options in that state. (Grandfathered plans must report data.)
9/23/10	Dependent Coverage Extension to Age 26	Requires group and individual plans that cover dependents to make coverage available until a dependent turns 26. Eligible dependents include the subscriber's (or subscriber's spouse's) children who are under age 26. Plans must provide coverage to all eligible dependents, including those who are: Not enrolled in school Not dependents on their parents' tax returns Married Grandfathered plans that are group health plans may exclude coverage for dependents who are eligible for other employer-sponsored coverage. Please note that the 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.
9/23/10	Preventive Care with No Cost-Sharing	Provides for coverage of preventative health care services with no cost-sharing. (Grandfathered plans excluded.)
9/23/10	Lifetime Limits	Prohibits placing lifetime limits on the dollar value of benefits.
9/23/10	Annual Limits	Restricts annual limit on the dollar value of essential health benefits for plan years prior to January 1, 2014. (Grandfathered individual plans excluded.)
9/23/10	Minimum Loss Ratio Reporting	Requires insurers to report plan costs for purposes of calculating the insurers' minimum loss ratio (MLR). 2011 Rebates Requires insurers to rebate costs that exceed the MLR threshold. The threshold in the large group market is 85 percent. This allows states to set lower MLRs. (Grandfathered and new plans included.)
9/23/10	Restrictions on Rescissions	Prohibits rescissions. Rescissions would still be permitted in cases where the covered individual committed fraud or made an intentional misrepresentation of material fact, as prohibited by the terms of the plan or coverage.
9/23/10	Appeals Process Requirements	Requires plans to establish a process for appeals of coverage and claims determinations, including external review of adverse claims decisions. (Grandfathered plans excluded.)
9/23/10	Emergency Services Provision	Allows access to emergency care requirements without prior authorization, and with equivalent cost-sharing for non-network and network providers. (Grandfathered plans excluded.)
9/23/10	Primary Care Provider (PCP) Designation Provision	Allows choice of PCP, including choice of pediatrician for children (for plans that require designation of a PCP). (Grandfathered plans excluded.)
9/23/10	Non-Discrimination Based on Salary	Requires insured group health plans to meet current IRC § 105(h)(2) requirements for self-funded group health plans that prohibit discrimination in favor of highly compensated individuals. (Grandfathered plans excluded.) Please note that there are existing non-discrimination requirements under Massachusetts law.

1. Most provisions go into effect on the first day of the plan year that begins on or after the implementation date.

This information is provided for informational purposes only and does not constitute legal advice. Please consult your legal counsel regarding your specific situation.

Please note that this content is only intended to describe national health care reform requirements under the Patient Protection and Affordable Care Act (PPACA). It does not address Massachusetts law requirements or the potential impact of Massachusetts law on federal PPACA requirements.

For purposes of PPACA implementation, Blue Cross Blue Shield of Massachusetts assumes the plan year is the policy year, unless an account notifies us otherwise.