On March 23, 2010, President Obama signed into law the health care reform bill, the Patient Protection and Affordable Care Act. This legislation, along with the Health Care and Education Reconciliation Act of 2010, makes sweeping changes to the U.S. health care system. These changes will be implemented over the next several years.
Higginbotham is committed to providing frequent updates on health care reform activity so you can plan accordingly and remain in compliance. Check back here often for the most recent legislative changes.
Your Insurance Cycle
To be compliant in 2015, large employers should establish examination periods to determine which employees are eligible for insurance and when coverage must be provided. This examination consists of a Standard Measurement Period, an optional Administrative Period, and a Stability Period.
The Standard Measurement Period is a look-back period that employers use to determine which employees qualify for full-time status. It can be between three and twelve months and should be consistent from year to year. For 2015 only, transition relief will allow employers to use a Standard Measurement Period that is shorter than their “normal” Standard Measurement Period, so long as it lasts at least six months and begins before July 1, 2014.
Employers may choose to use an Administrative Period after their Standard Measurement Period. Employers can use this period to determine which employees qualify for full-time status based on the data collected during the Standard Measurement Period, notify these employees of their eligibility for benefits and conduct open enrollment. The Administrative Period must come directly after the Standard Measurement period and cannot exceed 90 days.
Employers must also offer a Stability Period during which employees may/may not be eligible for coverage. Employees that were deemed to be full-time employees during the Standard Measurement Period and elected coverage during the Administrative Period must be offered coverage for this entire period even if they cease to be full-time employees. This period must last as long as the Standard Measurement Period, but not less than six months.
Your Insurance Cycle will depend on your specific considerations, including:
- When should coverage begin?
- What are the administrative needs of your company?
- What are typical turnover rates, seasonal fluctuations and insurance needs of your company?
- Do you have “Variable Hour” or “Seasonal” employees which have their own distinct examination periods (Initial Measurement Period/Administrative Period/Stability Period)?
90-Day Waiting Period
As mentioned above, once employees are determined to be eligible for coverage, employers cannot withhold that coverage for more than 90 days. Employers may enforce eligibility conditions, so long as the conditions are not solely based on time and not designed to avoid compliance with the 90-day waiting period limit. Additionally, employers are allowed to use an Orientation Period of up to one month prior to the 90-day period’s beginning. However, even with this final rule, employers must still provide insurance no later than the first day of the fourth month of employment, which may come earlier than the orientation month plus 90 days. Hopefully, we will soon receive further clarification on how these two rules interplay with each other.
Starting January 1, 2015, Applicable Large Employers (under § 6056), self-insured plan sponsors and any other entity that provides Minimum Essential Coverage (under § 6055) must report information on that coverage to the IRS and their full-time employees. Both filings provide information regarding available employer-sponsored coverage. The first returns will be due in 2016 for coverage provided in 2015.
Health Care Reform Timeline—A detailed summary of requirements through 2018
Reporting Requirements for Employers and Health Plans
2015 Compliance Checklist
Health Care Reform Activity
Sept. 2, 2014—Pay or Play Penalty: When to Begin Tracking Employee Hours
Sept. 2, 2014—90-day Waiting Period Limit: Permitted Orientation Periods
Sept. 2, 2014—Pay or Play Penalties: Look-back Measurement Method Examples
Aug. 28, 2014—Draft Instructions for Employer Reporting of Health Coverage Released
July 31, 2014—Patient-Centered Outcomes Research Institute (PCORI) Fees
June 30, 2014—Supreme Court Rejects Contraceptive Mandate for Some Companies
May 2, 2014—Agencies Release New COBRA Guidance for Individuals and Employers
Apr. 1, 2014—Annual Deductible Limit Repealed for Small Health Plans
Mar. 5, 2014—Final Rules Released on Reporting for Issuers and Self-funded Employers
Feb. 12, 2014—Employer Mandate Delayed Until 2016 for Medium-sized Employers
Feb. 10, 2014—Final Employer Shared Responsibility Regulations Issued
Jan. 1, 2014—90-Day Waiting Period Limit
Dec. 19, 2013—New Options for Individuals Whose Policies Have Been Canceled
Nov. 14, 2013—White House Announces Transition Policy for Canceled Health Plans
Oct. 31, 2013—Changes to “Use-or-lose” Rule for Health FSAs
Oct. 1, 2013—Exchange Notice Requirements for Employers
Sept. 11, 2013—FAQ on Exchange Notice Penalties
Aug. 27, 2013—IRS Issues Final Rules on Individual Mandate Penalties
July 2, 2013—Employer Mandate Penalties Delayed Until 2015
May 29, 2013—Agencies Issue Final Rules on Workplace Wellness Programs
May 8, 2013—DOL Issues Model Exchange Notice and Sets Compliance Deadline
May 3, 2013—Proposed Rule Released on Minimum Value and Affordability
Jan. 24, 2013—DOL Delays Exchange Notice Requirements
June 28, 2012—Supreme Court Upholds Health Care Reform Law
May 30, 2012—IRS Provides Guidance on $2,500 Health FSA Limit
Mar. 23, 2012—Health Plan Summary of Benefits and Coverage
Feb. 9, 2012—Status of DOL Model FMLA Forms
Dec. 2, 2011—Final Regulations Issued on Medical Loss Ratio
Nov. 14, 2011—IRS Q&A on Form W-2 Reporting
July 8, 2011—Interim Final Rule on Administrative Simplification
June 24, 2011—DOL Amends Interim Final Rule on Appeals Process
June 17, 2011—Waiver Program for Annual Limits Will Close to Applications