Health Care Reform in 2010 and 2011

The healthcare reform passed on March 23rd of 2010. A lot of the changes listed occur on the 23rd of Sept 2010. Normally that would mean beginning the first of Oct and afterwards you will be able to add children up to age 26 who are not currently covered during your open enrollment.

Beginning in 2011, employers will be required to disclose the value of health care benefits on an employee’s annual W-2.

Beginning in 2010, small businesses with fewer than 25 employees and average wages of less than $50,000 get a tax credit for their contributions to buying health insurance for employees. The tax credit starts at up to 35 percent and increases to 50 percent in 2014 when the exchange is operational. A full tax credit may be available to small businesses with fewer than 10 employees and average wages of less than $25,000. PLEASE SEE THE IRS BULLETIN. REMEMBER TO CONSULT WITH YOUR C.P.A. OR A TAX ATTORNEY FOR ADVICE ON THESE CREDITS.


Effective for new plans or plans renewed six months after the enactment date unless otherwise noted (includes “grandfathered plans”):

  • Lifetime and annual limits. Plans may not impose lifetime limits on the dollar value of essential benefits. Annual limits will be restricted (to be determined by HHS).
  • Rescissions. No rescissions are permitted, except in cases of fraud or intentional misrepresentation.
  • Coverage for adult children. Children may stay on their parents’ policies until age 26 if coverage isn’t available through their work, regardless of their marital status. Any employer contribution toward the premium is a tax-deductible business expense for the employer and not taxable income for the member.
  • Pre-existing conditions. Plans may no longer impose pre-existing condition exclusions for children under 19.

Effective for new plans or plans renewed six months after the enactment date (does not include “grandfathered plans”):

  • Preventive services. New policies must cover the full cost of preventive care as recommended by the U.S. Preventive Services Task Force, recommended immunizations, preventive care for infants, children and adolescents, and additional preventive care for women.
  • Appeals. New minimum requirements for internal and external claims appeals processes.
  • Patient protections. Plans that require or provide for a primary care provider (PCP) designation must allow each member to designate any in-network PCP, or pediatrician for children, accepting new patients. Plans may no longer require an authorization or referral to an Ob-Gyn. Prior authorization or increased cost-sharing for emergency services is also prohibited.
  • Nondiscrimination rules. Nondiscrimination rules that apply to self-funded health plans are expanded to group fully insured health plans. Plans cannot base an employee’s eligibility or continued eligibility on hourly or annual salary.
  • Medical loss ratio (MLR). An insurer must publicly report on its MLR and spend at least 80 percent of small group premiums on medical services or provide rebate payments to enrollees.
  • Spending accounts. Health savings accounts (HSAs) and flexible spending accounts (FSAs) may no longer be used to purchase over-the-counter drugs unless prescribed by a doctor. Increases tax for non-qualified HSA withdrawals from 10 percent to 20 percent, and for Archer MSA withdrawals from 15 percent to 20 percent.
  • HHS studies. HHS is required to study the group health plan markets to compare employer characteristics and determine whether the new insurance market reforms are likely to cause adverse selection in the large group market or to encourage small and midsize employers to self-insure. HHS and the Department of Labor must also collect information on self-funded plans. These studies could lead to additional employer reporting requirements.
  • Uniform explanation of coverage. Within 12 months of the law’s enactment, HHS, in consultation with the National Association of Insurance Commissioners, will develop uniform standards and definitions for summaries of benefits and coverage explanations. Within 24 months of enactment, group health plans must provide enrollees and applicants with coverage documents that meet these standards.

Tax Credits Available to Businesses Who Qualify

There are tax credits available to businesses who qualify. Below is the link on the I.R.S. web site. It would be a great idea to see if there are credits available to your business. Sharing this and discuss it with your tax advisor.

For any new plans an employer enrolls in after 10-01-2010 or any non grandfathered plans which means any new plans or plan designs effective after 03-23-2010 must cover preventative procedures at 100% with no co-pay. With existing plans the benefits will roll in at renewal time. For a list of those procedures go to

Federal Government Issues New Health Reform Guidance and Notices April 13, 2011

Proposed Rule on Accountable Care Organizations Released

On March 31, several Federal agencies released for public comment various documents regarding Accountable Care Organizations (ACOs). The central document includes the Proposed Rule released by the Centers for Medicare & Medicaid Services (CMS) on ACOs under the Medicare Shared Savings Program.

The Proposed Rule includes several elements impacting the beneficiary experience, including:

  • Requires ACO-participating providers to notify beneficiaries that they are receiving care in an ACO and that the provider is eligible to receive additional payment or be liable for potential losses, depending on whether the provider delivers high quality, cost-effective care.
  • Requires each ACO-participating provider to notify the beneficiary that the beneficiary’s claims data may be shared with the ACO, as well as provide the beneficiary with the opportunity to opt-out of those data sharing arrangements.
  • Prohibits providers from requiring that a beneficiary obtain services from another provider or supplier in the same ACO.

Participation Requirements
The Proposed Rule elaborates on the statutory requirements provided in the Affordable Care Act concerning participation in the Shared Savings Program (SSP), and notes the following:

  • ACOs must complete an application in order to participate in the SSP, and must document how the ACO plans to deliver high quality care at lower costs for the beneficiaries it serves. CMS will not automatically accept ACOs into the SSP.
  • Each ACO will be responsible for routine self-assessment, monitoring and reporting of the care it delivers.
  • The ACO must agree to accept responsibility for at least 5,000 beneficiaries, and agree to participate in the SSP for three years.

The Proposed Rule establishes quality performance measures and a methodology for linking quality and financial performance that will serve as the foundation for ACO payment. The Proposed Rule also requires ACOs to publicly report certain aspects of their performance and operations as a condition for participation in the SSP.

Early Retiree Reinsurance Program Application Process to End

Also on March 31, CMS issued a notice entitled, "Early Retiree Reinsurance Program." This notice announces that the ERRP will no longer accept new applicants after April 30, 2011. The ERRP was provided for by section 1102 of the Affordable Care Act, and was planned to provide early retiree health coverage for enrolling employers through 2014.

With 1,300 employers already enrolled in its first year, the ERRP will exhaust its $5 billion in funding earlier than expected. In order to fund the retiree coverage of current enrollees through 2014 it became necessary to close the application period earlier than expected.

W-2 Guidance

On March 29, 2011, the Internal Revenue Service (IRS) issued interim guidance (Notice 2011-28) on how employers will be required to inform employees of the cost of their “applicable” employer- sponsored group health plan coverage. This informational reporting is required as part of the Affordable Care Act to provide comparable information to employees to inform them of the cost of their health care coverage. This is an informational reporting obligation and does not cause excludable employer provided health care coverage to become taxable. HIPAA “excepted benefits” plans are not subject to the W-2 reporting requirements (e.g., accident, disability income, supplemental liability, workers’ compensation insurance). In addition, amounts contributed to an Archer MSA, FSA, HSA and HRA are not reportable.

Effective Date
The guidance makes clear that the reporting requirements generally apply beginning with the 2012 W-2 forms (required for the calendar year 2012 to be furnished to employees in January 2013). Employers are not required to report the cost of health coverage on any forms required to be furnished to employees prior to January 2013. Employers must provide the written statement before January 31 of the succeeding year. Employees who terminate employment mid-year must receive the report within 30 days after the employee requests a copy. Notice 2010-69, issued last fall, made the reporting requirement optional for all employers for the 2011 Forms W-2 (generally furnished to employees in January 2012). Employers may rely on the guidance provided in this Notice if they voluntarily choose to report the cost of coverage on 2011 Forms W-2.

Using a question-and-answer format, the Notice includes information on how to complete the reporting, what employers are impacted and the coverage that needs to be included, and how to determine the cost of the coverage

Transition Relief
The Notice also provides additional transition relief for certain employers. This includes smaller employers that are required to file fewer than two hundred and fifty 2011 W-2 forms. These small employers will not be required to report the cost of health coverage on any forms required to be furnished to employees prior to January 2014. This transition relief will continue until the issuance of further guidance. To the extent that future guidance impacts additional employers, or categories of employers, or additional types of coverage, this supplemental guidance will apply prospectively only and will not apply to any calendar year beginning within six months of the date the guidance is issued.

Technical Notice Extends Claims and Appeals Grace Periods

The Departments of Labor (DOL), Health and Human Services (HHS), and Treasury (the Agencies) issued Technical Release 2011-01 (TR 2011-01) on March 18, 2011. TR 2011-01 extends the grace period established last year by the DOL as part of its Technical Release 2010- 02.

TR 2010-02 was issued by the DOL on September 20, 2010, and establishes an enforcement grace period for compliance with certain new internal claims and appeals provisions. TR 2011-01 now extends the enforcement grace period for most of the same provisions until January 1, 2012. There is also no requirement that plans work in good faith to implement such requirements because more federal guidance is anticipated shortly.

Extension Details
TR 2011-01 extends the enforcement grace period set forth in TR 2010-02 until plan years beginning on or after January 1, 2012 for most but not all provisions. This extension is being provided to give the Agencies time to publish more detailed regulations in order for plans to implement the internal claims and appeals provisions. The provisions subject to the extension include:

  • Notices must be provided in a culturally and linguistically appropriate manner.
  • Timeframes for making urgent care claims decisions (as soon as possible, taking into account the medical exigencies, but not later than 24 hours after the receipt of the claim).
  • Strict compliance requirements or plan participants will be able to initiate certain expedited appeal rights (e.g., to an independent external review agent).
  • Automatic disclosure of diagnosis and treatment information.

The enforcement grace period will be extended with respect to the other disclosure requirements until the first day of the first plan year beginning on or after July 1, 2011 (which is January 1, 2012 for calendar year plans). Therefore, enforcement with respect to the following provisions will take effect on a rolling plan year basis, starting on the first day of the first plan year beginning on or after July 1, 2011:

  • The disclosure of information sufficient to identify a claim (other than the diagnosis and treatment information as noted above).
  • The description of available internal appeals and external review processes.
  • The disclosure of the availability of, and contact information for, an office of health consumer assistance program or ombudsman for plans and issuers in States in which one is established.

Next Steps and the Good Faith Effort Requirement
The Agencies intend to issue an amendment to the interim final regulation issued on July 23, 2010 (IFR) in the near future that takes into account comments and other feedback received from the public in response to the requirements set forth in the IFR. Although TR 2010-02 required plans to work in good faith to implement such standards during the enforcement grace period, this requirement was lifted in TR 2011-01. Therefore no such requirement will apply during either the extended or the original enforcement grace period.

Constitutional Challenge Update

To date five U. S. District Courts have ruled on the constitutionality of the individual mandate provision contained within the Affordable Care Act Two courts ruled the mandate unconstitutional with one finding the entire law must be struck down. The latest court ruling by Judge Roger Vinson in Florida agreed to stay his January 31 ruling that the Affordable Care Act is unconstitutional, while the appeal by the Department of Justice is pending.