PPACA in 2013

PPACA in 2013

For employers and plan sponsors that have been adopting a “wait and see” approach before focusing on compliance with the Patient Protection and Affordable Care Act (PPACA), the wait is over. PPACA’s insurance mandates, market reforms, and employer requirements will move ahead as scheduled, with most of PPACA becoming fully effective in 2014. That is just one short year from now. Since the law left the task of working out specific details to the regulatory agencies (Department of Labor, IRS, and Department of Health and Human Services), employers can expect to see significant guidance between now and the end of 2013. We created this UPDATE to assist our clients with the complexities of PPACA, but must also give credit our legal partner, Proskeaur Rose, LLP for its preparation as several points come from a similar briefing prepared by their office on this topic.

THE NEW YEAR IS HERE, WHAT DO EMPLOYERS NEED TO KNOW AND DO FOR 2013?

For most employers, 2013 will be a critical “planning year” to prepare for the most notable PPACA provisions which impact plans in 2014. However, several important elements of the law were effective inlate 2012, or will become effective during 2013, including:

  • Expanded 100% coverage for women’s preventive care services, including certain contraceptives. (effective August 2012)
  • Mandatory W2 reporting on the aggregate cost of “applicable health coverage” for employers who issued more than 250 W2s for the 2011 tax year. The requirement will apply to all employers, regardless of size, when issuing W2s for 2013.
  • Issuance of Summaries of Benefits and Coverage (SBCs) to all eligible enrollees for open enrollment periods and plan years beginning on or after September 23, 2012.
  • $2,500 limit on pre-tax contributions to healthcare flexible spending accounts (FSAs) as of the first day of the 2013 plan year
  • Requirement to notify employees of the availability of health insurance exchanges (guidance pending; intended to be effective March 2013)
  • Increase in the Comparative Effective Research Fee (from $1 to $2 per participant per year) for the 2013 plan year
  • 0.9% Medicare payroll tax increase for individuals earning over $200,000 effective with the 2013 tax year

PREPARING FOR 2014

As noted above, the majority of PPACA’s most impactful provisions will arrive in 2014. Employers must start now and develop an action plan to prepare for the following legislative provisions and market reforms:

  • Maximum 90-day limit on eligibility waiting periods
  • Complete prohibition on preexisting condition exclusions for all individuals
  • Elimination on annual dollar limits for “essential health benefits”
  • Deductible limits of $2,000 single / $4,000 family for groups under 100 (clarification pending for larger employers)
  • Maximum Out-of-Pocket limits capped at the level set for HSA-compatible high-deductible plans ($6,250 single / $12,500 family) for groups under 100 (clarification pending for larger employers)
  • Coverage under non-grandfathered plans for certain approved clinical trials
  • Guaranteed availability and renewability of insured group health plans
  • Requirement for employers to certify to the Department of Health and Human Services regarding whether its group health plan provides “minimum essential coverage” (reports are actually due in 2015 based on 2014 benefits)
  • Fees commence under the Transitional Reinsurance Program. This assessment will be imposed from 2014-2016 in order to stabilize premiums in individual markets. Fees for the 2014 plan year are expected to be $5.25 per employee per month
  • Increase in allowable “outcome-based” wellness incentives from 20% to 30%
  • Initial phase of the Medicare Part D “donut hole” fix, which will eliminate the Medicare Part D coverage gap by 2020

PAY OR PLAY & THE EXCHANGE

Perhaps the most anticipated PPACA provision in 2014 is the “Pay or Play Penalty” and its impact on large employers. For purposes of this provision, large employers are defined as having 50 or more “full-time equivalent” employees. Full-time employees are those who work a minimum of 30 hours per week and there is an equivalency test for employers with significant numbers of part time employees. The determination of the number of full-time employees is based on the prior year. Further, an employer may take any consecutive six-month time frame during 2013 to determine if they will be subject to the large employer requirements in 2014.

The term “Pay or Play” refers to the requirement for large employers to offer full-time employees “adequate” and “affordable” coverage; or pay excise tax penalties for failing to do so. IRC §4980H & IRC §4980H (b) outline the applicable excise tax penalties for such employers. The penalties will be imposed when employees who do not have access to “adequate” and “affordable” coverage receive a tax credit for exchange-based coverage. Only citizens and legal U.S. residents who are not eligible for Medicaid and whose household income does not exceed 400% of the federal poverty level are eligible for exchange based tax credits.
The potential tax penalties foremployers are as follows:

Employers who do not offer coverage: An assessment of $2,000 per full-time employee per year will be charged to groups provided that at least one employee obtained a tax credit for coverage through the state or federal exchange. This fee will not apply to the first 30 full-time employees.

Employers who offer coverage that is “inadequate” or “unaffordable”: $3,000 per employee per year for each employee who obtains a tax credit for coverage through the state or federal exchange. Affordable means that the employee contribution for the lowest cost qualified plan does not exceed 9.5% of the employee’s prior year or annualized W2 wages as per the proposed IRS Safe Harbor rules. WWW can provide a pay or play analysis for you if you believe you may have an issue with a lower paid portion of your workforce.

Transitional relief will be provided for large employers who currently offer a non-calendar year plan. Such employers will not be liable for tax penalties under §4980H(b) for any months prior to the first day of their plan year beginning in 2014, so long as the 2014 plan is both “adequate” and “affordable”.

WHAT’S NEXT

In the coming weeks, plan sponsors should anticipate a flood of regulations which are expected to provide clarity on the above and other long-awaited topics such as the non-discrimination rules, testing framework to ensure that benefit plans do not discriminate in favor of highly compensated employees, and further clarification on the look forward/look back eligibility requirements to determine whether an organization is a large employer.

Amidst the uncertainty, it is clear that employers will see premium increases in 2014 when PPACA is fully implemented. While there are a variety of options to mitigate PPACA’s cost impact, employers must be mindful of employment law and ERISA implications when making such changes. Preplanning is essential. Employers considering workforce realignment, reduction in work-force, or benefit modifications should be discussing approaches with their consultants and advisors now. Proper compliance will likely require implementing certain changes in 2013 in order to satisfy any applicable “look-back” period requirement for 2014.

Wallace Welch & Willingham remains your committed partner
in PPACA compliance and looks forward to working with
each client on proper PPACA planning and strategy.

When signing a subcontractor agreement, what concerns should I have regarding an indemnification clause or subcontractor agreement?

The scope and liability contained in a subcontractor agreement range widely, from very simple to the complex and punitive. Before signing a subcontractor agreement you should be aware of your responsibilities and liabilities imposed by that contract and whether your company has the means to accept the financial consequences and/or how your insurance will respond.

Definitely understand what risk you accept in the indemnification language. Typically the upstream party will impose an indemnification and hold harmless clause that at least requires you to indemnify them for liabilities where you are at least partially negligent. This may mean an indemnification for only your proportionate responsibility or upwards of their full sole negligence. Imagine your employee removes a safety barrier on a project in order to receive materials at the 3rd floor of a project, and fails to replace the safety barrier. Later an employee for another subcontractor, unaware the barrier has been removed, falls from the side of the building. That injured employee will likely see workers’ compensation and file a lawsuit against the building owner/contractor for negligence. If an indemnification agreement exists between the owners/contractor and you, you can expect the claim to be tendered to you for defense and indemnification. How will your insurance respond?

Your insurance coverage is equally important to the indemnification clause in the subcontractor agreement. If signing a broad (includes sole negligence of the owner) form indemnity agreement, then your insurance coverage should be the broadest available, with sufficient limits, as the indemnification agreement you have signed. This means your policies should include blanket waiver of subrogation for Auto, Work Comp, and General Liability, to prevent you insurance companies from tendering claims against the owner for their negligence that the owner will simply tender back to you under the indemnification agreement. Your policies should also include broad additional insured coverage to provide coverage for ongoing and completed operations (without a limitation of time after construction is completed) and provide coverage on a primary and non-contributory basis. Finally your policy should never include exclusions or restrictions that would place your company at financial risk due to an uncovered loss or an indemnification agreement. Examples of such exclusions/restrictions would be:

1)  Modification of the definition of “insured contract”, which reduces your liability coverage to respond when you are negligent “in whole or in part”. If you have signed an indemnification agreement to respond for the Owners/Contractors “sole negligence”, you may have a gap in coverage.

2)  Exclusion for residential construction. This would eliminate/reduce completed operations coverage for your work.

Now that the Supreme Court has ruled… what’s next?

Now that the Supreme Court has ruled... what's next?The individual mandate will stand as a “tax” versus commerce and Affordable Care Act will move ahead.  With all the fanfare Employers are beginning to plan for their next steps.

Some next steps Employers need to be thinking about:

1). Review your benefit offerings to make sure they meet the guidelines of essential coverage.

2). Watch your mail for notice of the MLR rebate and determine how you will distribute if your
plan qualifies.

3). Confirm with your carrier that your plan has been amended to comply with the Women’s Preventive Care provisions.  Must comply as plans renew beginning 8/1/12.

4.) Be on the lookout for your new Summary of Benefits and Coverage. Carriers are required to provide these for open enrollments/plan years beginning 9/23/12.

5.) If you have a Flexible Spending Account (FSA) you will need to check the allowable maximum. It is now restricted to $2,500 per person up to $5,000 per family.

6.) Employers who submit 250 or more W2 for 2012 must include the value of health care coverage in box 12 on employees W2. Check with your payroll vendor to make sure this amount can be tracked and reported.

Looking further ahead 2014 marks the deadline for many of the major provisions in Obama Care. Individual mandates begin, wellness initiatives are strengthened, automatic enrollment is mandated, waiting periods are restricted, penalties for NOT providing coverage begin, exchanges roll out, pre-existing provisions are eliminated and premium subsidies for lower income individuals become available.

Wallace Welch and Willingham is monitoring the events as they unfold and will keep you up to date on steps towards compliance. We welcome your questions and will be happy to assist.

This legislation still has many voids and unanswered issues. We anticipate seeing significant clarification and revision.  The 2012 presidential election could also have significant impact on the Affordable Care Act. So, for some employers “wait and see” may still be the best next step.

April is National Donate Life Month

Here are some interesting facts from the US Department of Health and Human Services regarding organ donations:

  • In 2010, 62% of living donors were women. The statistic is reversed for deceased donation.
  • In 2010, 67% of all deceased donors were White, 16% were Black, 13% Hispanic and 2.3% Asian.
  • As of December 2011, the national waiting list was made up of 45% White, 29% Black, 18% Hispanic, and 7% Asian.
  • In 2007, (the most recent data) there were almost 2.5 million deaths in the U.S. Imagine if every one of those persons
  • had donated.
  • Currently, more than 100 million people in the U.S. are signed up to be a donor—sign up and join them.

The Gap Continues to Widen

Right now, there are more than enough people waiting for an organ to fill a large football stadium twice over

April Blog Graph

You can help by registering as an organ donor, bone marrow donor, or donate blood.

US Department of Health and Human Serviceshttp://organdonor.gov

National Marrow Donor Program http://marrow.org

Florida Blood Services www.fbsblood.org

 

What can we do as a company?

If  your company would like to be a Workplace Partnership for Life for organ donation registrations, please contact the US Department of Health Resources and Services Administration at the below address or visit their website:

Workplace Partnership for Life
Attn: Venus Walker
Division of Transplantation
5600 Fishers Lane, Room 12C-05
Rockville, MD 20857
E-mail: vwalker@hrsa.gov
Fax: (301) 594-6095
http://organdonor.gov/howhelp/workplace.html

What’s your nutrition IQ?

This month is National Nutrition Month. In honor of this month, I thought we could test your nutrition IQ. Below is a short quiz about fruits and veggies.

Check your answers below!! Good luck.nutrition iq

  1. What vegetable has the highest content of beta carotene of all vegetables?
  2. What fruit do Americans eat most often?
  3. What vegetable is shaped like a spear and has a lot of folic acid, potassium and fiber?
  4. According to the U.S. Department of Agriculture Food Guide Pyramid, how many servings of veggies should you eat each day?
  5. Tomatoes are very high in the carotenoid lycopene. Eating foods with carotenoids can lower your risk of ______?
  6. What is the only fruit that has its seeds on the outside?
  7. What has more fiber than most other fruits and veggies?
  8. What has the most antioxidants than most other fruits and vegetables?
  9. What is the best vitamin C-rich vegetable you could eat?
  10. What is the best iron-rich vegetable available?

How did you score?  Find your answers here