News & Knowledge
Health Care Reform: With the Employer Mandate and Insurer Reporting Requirements Delayed – What’s Left for 2014?
Jonathan A. Kenter
Evelyn Small Traub
Jeanne E. Floyd
On July 3, the Obama administration announced a delay in the employer mandate to provide health insurance and the insurer reporting requirements under the Patient Protection and Affordable Care Act (“ACA”). See our prior alert on the delay available here. The employer mandate and insurer reporting requirements – which were scheduled to become effective on January 1, 2014 – will now be delayed until 2015. Formal guidance describing the delay was issued on July 9, 2013. However, the delay does not affect a number of provisions of ACA that are applicable to employer sponsored group health plans which are scheduled to take effect in 2014. This alert describes the plan design changes that employers must implement for the 2014 plan year.
The formal guidance makes it clear that the delay affects only the penalties applicable to employers that fail to offer minimum value affordable coverage and the information reporting associated with such penalties. Employers are encouraged, however, to voluntarily comply with information reporting (once rules have been issued) and to maintain or expand health coverage in 2014.
The delay does not affect the following provisions of ACA that are applicable to employer sponsored group health plans which are scheduled to take effect in 2014:
- Pre-existing condition exclusions - Group health plans will no longer be able to avoid paying benefits because participants have a pre-existing condition prior to joining the plan. This prohibition took effect earlier – as of plan years beginning on or after September 23, 2010 - with respect to individuals who are under 19 years of age. Please see our prior alert available here for additional details.
- Exclusion of adult children - Grandfathered plans will no longer be permitted to exclude adult children who have health care coverage under the child’s employer’s plan. Please see our prior alert available here for additional details.
- Waiting periods limited - Waiting periods greater than 90 days will no longer be permitted. Please see our prior alert available here for additional details.
- Annual dollar limits - Annual limits on the dollar amount of “essential health benefits” for any individual are prohibited. Essential health benefits include ambulatory care, emergency care; hospitalization; maternity/newborn; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devises; lab; preventive/wellness and chronic disease management; and pediatric services including dental and vision care. Please see our prior alert available here for additional details.
- Annual limit rule - The temporary waiver on the annual limit rule expires. This means that “limited benefit“ or “mini-med” plans often offered to lower wage, part-time or temporary workers or volunteers and stand alone health reimbursement accounts (HRAs) cannot be maintained after the 2013 plan year. Retiree only HRAs are still permitted. Annual limit rule needs explanation.
- Coverage for certain clinical trials - Non-grandfathered plans must provide coverage for certain clinical trials and cannot deny or limit coverage of routine patient costs for items and services furnished in connection with the trial, or discriminate against an individual based on participation in the trial.
- Essential health benefits - Non grandfathered, fully-insured, small group plans must provide essential health benefits.
- Cost sharing - Cost sharing provisions in non-grandfathered plans may not exceed high deductible health plan (or “HDHP”) maximum out-of-pocket limits (for 2014 these maximums are $6,350 for self-only coverage and $12,700 for family coverage). If a plan uses multiple providers such as separate pharmacy benefit manager or behavioral health management organization, a one year safe harbor extension applies if certain conditions are met.
- Maximum annual deductible - Fully insured small group health plans may not apply an annual deductible that exceeds $2,000/$4,000 (as adjusted). Health savings account, flexible spending account and HRA contributions may be taken into account as regulations permit.
- Reinsurance fees - Transitional reinsurance fees will be imposed. Please see our prior alert available here for additional details on the reinsurance fees.
Compliance with automatic enrollment requirements that will be applicable to employers with more than 200 full-time employees and the non-discrimination provisions applicable to fully insured plans continue to be on hold until guidance is issued.
At present, individuals will still be obligated to procure health insurance or pay a penalty starting in 2014, although the Administration will be hard pressed to maintain this requirement while delaying the employer mandate for large employers. In addition, starting in 2014, individuals also will have access to the premium tax credits available under the ACA without having to prove their eligibility.
The delay in the employer mandate and insurer reporting requirements does not impact the establishment of the government-sponsored insurance “exchanges,” which are scheduled to begin open enrollment in October 2013.
Stay tuned – we suspect this is not the last you will be hearing on the implementation of Obamacare.
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