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Recurring Questions about Health Care Reform

Following are recurring questions that our in-house compliance experts receive from HUB clients, most of which relate to aspects of Health Care Reform that have been delayed.

Q:  When will the nondiscrimination rules for insured plans become effective?

A:  Originally scheduled to take effect in January 2011, this part of the law was delayed and won't take effect until the IRS issues regulations.  In the meantime, the IRS promises us at least 6 months from date of issue before the rules will take effect, and they likely will have the rules then take effect on the next plan year (usually annual enrollment / renewal). The IRS is grappling with geographic premium cost differences and carrier participation requirements and does not want to issue a rule that causes or allows carriers to drop group policies.  We have heard one IRS attorney imply that the rule may be delayed until 2014.

Q:  Are Health Saving Accounts (HSAs) at risk?

A:  This rumor is the result of a Heritage Foundation email that cites an article written in April 2010.  It does not contain new information.  In fact, we are getting some indications from the Administration that HSAs may be allowed after 2014.  The federal agencies mention HSAs as a coverage possibility in the template for the Summary of Benefits Coverage (also known as the mini plan summary or SBC) as well as elsewhere in their guidance.   The agencies probably would not mention a plan option that would be eliminated.

However, some operational aspects of health reform may mean HSAs are not an option for certain employees after 2014.  For example, smaller employers must not offer plans with deductibles over $2,000 single or $4,000 family - amounts which are too low for the covered employees to be HSA-eligible.  Also, some carriers are concerned that the minimum value rules and the related federal standards and calculators will mean lower deductible plans do not qualify any longer.  HUB is following this issue very closely.

Q:  If an employer is able to maintain a grandfathered plan in 2014 and beyond, what does that mean for the employer?  Is the employer able to avoid the "play-or-pay" mandate and penalties? 

 A:  An employer who is able to maintain a grandfathered plan can continue to avoid some of the early and upcoming health reform requirements, but the "play-or-pay" mandate cannot be avoided by grandfathering if the employer has over 50 full-time employees.  Grandfathered plans already avoid the preventive benefit rules (including contraceptive coverage at 100% starting this fall) and the new claims and appeals rules.  Some insured plans' carriers are including those features in all plans, anyway, regardless of grandfathering, so these may be a non-issue for those groups. Grandfathered plans also avoid the 2014 mandate to cover all the medical costs associated with clinical trials, a huge exposure for self-funded plans in particular.  (Check your stop-loss contract for its reinsurance terms; some nation HUB partners will cover clinical trials.)  Finally, an employer with an executive medical plan or a carve out for a portion of its total population (usually managers and above) will be able to continue offering that option just for those currently eligible employees, not for other workers. However, the employer cannot avoid the overall employer mandate in 2014, so if subject to the law, affordable, minimum coverage must be offered to all full-time employees or a penalty will apply.