Health care reform: Mark your calendar with these milestones

When President Obama signed health care reform legislation on March 23 (and related amendments on March 30), the clock started ticking on a series of changes that HRprofessionals will be dealing with for at least the next eight years.

Complying with the provisions of the Patient Protection and Affordable Care Act (PPACA) will demand close coordination between HR, insurance companies and Uncle Sam.

Don’t panic if you’re not fully conversant on all the details of health care reform. The Department of Labor, the IRS and other federal agencies will spend the next months and years publishing regulations that will put meat on the bones of this often confusing law.

“We expect a lot of changes to this law through the regulations that will be coming out in the next few years,” said Melissa Listug Klick, attorney of the Paul Plevin law firm, at the HR Specialist Labor & Employment Law Advanced Practices (LEAP) Symposium in April.

The provisions of the PPACA take effect over the next eight years. Here’s your reference for what to expect.

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2010: First things first

March 30

• PPACA (as amended) becomes law.
• Tax credits. Effective immediately, the law created tax credits for small employers (with 25 or fewer employees earning an average of less than $50,000) that provide health insurance benefits. Note: When we refer to the number of employees, we’re generally counting fulltime workers. Part-time employees count toward those totals on a prorated basis.
• Lactation support. Employers must begin offering “breastfeeding breaks”

June 29

• Temporary reinsurance program created for employers that provide health insurance for retirees over age 55 who aren’t eligible for Medicare.

Sept. 23

• Coverage for adult children. Individual and group policies must provide coverage for adult children of covered employees up to age 26. Note: The law requires this coverage for plan years that begin on or after Sept. 23, 2010, so if your group policy does not renew until Jan. 1, 2011, for example, the insurer won’t be required to cover adult children until then. However, many insurance companies have already begun offering coverage to adult children to avoid paperwork hassles.
• No lifetime limits. Health insurers can no longer impose lifetime limits on an individual’s coverage.
• Coverage denial. “Rescission”—the practice of denying coverage based on the discovery of a pre-existing condition— is now prohibited except in cases of fraud.

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2011: Details take shape

• Reporting. Beginning Jan. 1, employers must begin reporting employees’ health benefits on W-2s.
• FSA limits. Individuals may no longer use flexible spending account (or health savings account) funds to buy nonprescribed items, including over-the-counter medication.
• Wellness support. Government grants are created for small employers to establish wellness programs.

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2013: Calm before the storm

• FSA limits. Beginning Jan. 1, employee health care flexible spending account contributions are limited to $2,500.
• Nonprofit plans. Consumer Operated and Oriented Plan (CO-OP) program begins, a crucial step toward creating nonprofit, state-based health insurance exchanges designed to cover individuals who can’t buy insurance elsewhere.

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2014: Big changes!

• Individual mandate. Effective Jan. 1, all individuals must have health insurance, the so-called “individual mandate.” For an individual, the penalty for not having coverage begins at the greater of $95 or 1% of household income. By 2016, it reaches $695 or 2.5%, with further increases pegged to cost-of-living adjustments.
• Employer mandate. Employers with more than 200 workers must automatically enroll employees into a health insurance plan. Employees may opt out.
• Minimum benefits. Federal officials define an essential benefits package with which all insurance policies must comply.
• Risk pooling. State-based exchanges, known as Small Business Health Options Programs (SHOPs), open for business. They’re designed to allow small employers (usually those with 50 or fewer employees, although states have the option to lift the cap to 100 employees) to pool risk together, ideally lowering coverage costs.
• Low-income credits. Federal premium tax credits offered to subsidize individuals purchasing insurance in exchanges. If an employee’s household income is below 400% of the federal poverty line (about $22,000 today for a family of four) and insurance premiums fall between 8% and 9.8% of household income, the employer must offer a voucher (equal to the amount the employer contributes toward an employee’s premium) to purchase insurance.
• Employer penalties. Employers begin facing big penalties if they don’t offer health insurance. In a worst-case scenario, those with 50 or more employees, just one of whom receives the premium tax credit to buy insurance through a state exchange, will pay a fee of $2,000 per full-time employee (excluding the first 30 employees).
• Incentives. Employers can begin offering enhanced incentives to employees who participate in wellness programs that meet new federal standards.
• For older workers. Medicaid eligibility expands, which may make some of your older employees eligible to receive health insurance through Medicaid.

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2018: Paying for it

• Cadillac tax. The government begins collecting a 40% excise tax on health benefits worth more than $10,200 annually for an individual or $27,500 annually per family.

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