March 1st, 2012 | Lorene Park
While the battle over the Patient Protection and Affordable Care Act’s (ACA) individual mandate (the minimum coverage provision) continues to be waged before the U.S. Supreme Court in HHS v Florida, employers should be educating themselves on the new ACA requirements and planning for necessary changes to health plan documents. Many of the ACA provisions become effective beginning in 2014, including provisions for the automatic enrollment of full-time employees in an employer’s health plan and shared responsibility by employers. Shared responsibility means that a covered employer could be subject to an assessment if any full-time employee is certified to receive a premium tax credit or cost-sharing reduction payment. In the process of preparing for these and other upcoming changes, employers should be aware of several recent releases of information from the DOL’s Employment Benefits Security Administration (EBSA), and other agencies.
On February 9, the EBSA issued Technical Release No. 2012-01, which answers employers’ frequently asked questions about ACA concerning automatic enrollment, employer shared responsibility, and the 90-day limitation on waiting periods. The release, which is substantially identical to releases issued by the Department of Health and Human Services and the Treasury Department, also outlines approaches that the three departments are considering proposing in future regulations. The departments also simultaneously published, in the February 14, 2012 Federal Register, guidance for compliance with applicable regulations.
In addition, on February 17, HHS’s Center for Consumer Information and Insurance Oversight (CCIIO) released 22 frequently asked questions about the essential health benefits packages required by the ACA. The CCIIO addressed questions that arose from an earlier HHS bulletin released in December, which indicated that states would have the flexibility to select an existing health plan against which to set the “benchmark” for the items and services included in the essential health benefits package. This benchmark plan can be either: one of the three largest small group plans in the state; one of the three largest state employee health plans; one of the three largest federal employee health plan options; or the largest HMO plan offered in the state’s commercial market. The FAQ confirms that states are allowed to select only one plan as its “benchmark.” On February 24, HHS also announced new assistance to states, including a new round of grants to help states build new health insurance marketplaces.
Also of note is President Obama’s proposal to expand the small employer health care tax credit. The ACA added IRC Sec. 45R, which allows an eligible small employer to claim a tax credit if it makes nonelective contributions that pay for at least half of the cost of health insurance premiums for participating employees. According to a February 16 fact sheet issued by the White House, the budget proposal includes a measure that would make the tax credit available to more than 100,000 additional businesses. If Congress approves the proposal, more businesses will be eligible for the credit and some that are already eligible would get more cash back. The current tax credit is available to businesses that have fewer than 25 full-time workers, pay at least half of the cost of their workers’ health care premiums, and pay an average annual wage of $50,000. Part-time employees count in proportion to the hours they work. Under the proposal, businesses with as many as 50 employees would be eligible to receive a tax credit. Also, the proposal makes the phase-out schedule for the tax credit more generous and eliminates several eligibility requirements.
By taking proactive steps and reviewing FAQs, guidances, and other resources readily available from the DOL and other agencies to learn more about the many requirements of the ACA, employers will be in a better position to develop a plan for compliance. Additional general information about the ACA, including upcoming free compliance workshops, is available on the EBSA website at http://www.dol.gov/ebsa/healthreform/.