Health Care Reform Provisions Effective in 2012
Various Health Care Reform provisions become effective each year. This matrix (updated 3/8/12 for recent guidance) summarizes what’s coming in 2012 that most affects employers.
Provision, Effective Date, Who it Applies to
Comparative Clinical Effectiveness Research Fee
Effective January 1, 2012 for calendar-year policies & plans.
Applies for 2012-2018 calendar years
Applies to insured and self-funded plans, grandfathered & non-grandfathered plans, and individual policies
An annual fee of $1/enrollee (based on the average number of employees, spouses and dependents enrolled) will be assessed on all fully insured and self-funded health plans, for plan years ending after September 30, 2012 and before September 30, 2013. Fee is paid by carrier for insured plans and by plan sponsor for self-funded plans. Fee will be asses, collected and enforced under Tax Code, same as other taxes. Apparently fees will be due quarterly, but IRS has suggested future regs may provide for annual payment.
The fee will increase to $2/enrollee after the first year, and thereafter will be indexed for inflation.
The fee does not apply to stand-alone dental and vision plans. The fee will support the non-profit Patient-Centered Outcomes Research Institute, which will study and report on the effectiveness of various medical treatments.
W-2 Reporting of Value of Health Insurance
Effective January 1, 2012
Applies to plan sponsors who issue 250 or more
W-2’s for 2011
Employers with more than 250 employees in 2011 must report on the 2012 W-2s the aggregate value of health insurance provided to each employee. (These W-2s must be provided to employees by January 31, 2013). Employers should start capturing this information as of January 2012.
Reported amounts are primarily for medical coverage, but also include dental and vision coverage that is not “excepted” benefits (i.e., that is provided under same contract as medical, or that can be elected by participants at no additional cost). Report both employer and employee contributions. IRS Notice 2012-9 (issued Jan. 4, 2012) restates prior guidance and clarifies many issues about which employers had questions.
Employers with fewer than 250 employees in 2011 are not required to start reporting until tax year 2013 (W-2s will be provided in January 2014), but may elect to start in 2012 to ensure their systems can capture and report the information.
Claims and Appeals and External Review Procedures
Effective January 1, 2012
Applies to non-grandfathered insured and self-funded plans and individual policies.
HCR added various internal claims and appeals and external review procedures to existing ERISA requirements. DOL delayed their effective date by allowing an “enforcement grace period,” but this ends December 31, 2011. Three major provisions that will apply as of January 1, 2012 are:
(1) When a plan issues a notice of adverse benefit determination (i.e., a claim denial), it also must state that the recipient has aright to request the diagnosis and treatment codes (and theirmeanings), and must provide the information if requested.(2) Plans and issuers must provide denial notices (or a one sentence statement about the availability of non-Englishlanguage services) in the same non-English language if 10% or more of the population residing in the claimant’scounty are literate only in that non-English language.
(3) State external review processes must be either “NAIC-parallel” or “NAIC- similar.”
Uniform Summary of Benefits and Coverage (SBC) and Uniform Glossary
Effective Sept. 23, 2012
Applies to insured and self-funded plans, grandfathered & non- grandfathered plans, and individual policies
Health insurers and group health plans must provide applicants and enrollees—upon application and prior to enrollment and re-enrollment—with two standardized and easy-to-understand forms entitled the Summary of Benefits and Coverage (SBC) and the Uniform Glossary.
The SBC and Uniform Glossary must be provided no later than thirty (30) days prior to the first day of the new policy year, and no later than seven (7) days following a request for information. Health plans and insurers will be subject to fines for willfully failing to provide the forms.
Additionally, if a plan or insurer makes a mid-year change in coverage that affects the information in the SBC, they must notify enrollees of the change at least 60 days before it becomes effective.
New guidance issued Feb. 9, 2012 delayed the effective date to September 23, 2012 (rather than March 23, 2012) and included revised versions of the SBC and Uniform Glossary.
Quality of Care Reporting
HHS to issue requirements by March 23, 2012.
These should specify when employers must start reporting
Applies to non-grandfathered insured and self-funded plans.
The Department of Health and Human Services (HHS) must issue standardized annual requirements for quality reporting by insurers and group health plans. Insurers and plans will be required to report on covered benefits, reimbursement structures and other plan activities that improve health outcomes and patient safety, reduce medical errors, prevent hospital re-admissions and implement wellness and health promotion programs.
The reports must be provided to enrollees each year at open enrollment and also must be filed annually with HHS and will be posted on a website.
Not applicable to grandfathered plans.
Medical Loss Ratio (MLR) Rebates
First Rebates by August 1, 2012.
Applies to insured group and individual policies, both grandfathered and non-grandfathered
As of January 1, 2011, carriers must spend at least 80 cents of every dollar of premium revenue on medical costs for individual and small group contracts, and at least 85 cents of every dollar for large group contracts. If these minimum requirements are not met, carriers must issue rebates to policyholders.
For 2011 policy years, the first MLR report must be provided to HHS by June 1, 2012. If rebates are required they must be sent to policyholders by August 1, 2012. DOL issued Tech. Rel. 2011-04 on Dec. 2, 2011, guidelines to help ERISA plan sponsors determine what portion of the rebate is “plan assets” and how it should be allocated between current and/or prior-year plan participants.
Preventive Services for Women
Effective August 1, 2012
(January 1, 2013 for calendar year plans)
Effective August 1, 2013 for religious employers who do not offer contraceptive coverage due to religious beliefs
Applies to non-grandfathered plans and insurance policies
For plan years beginning on or after August 1, 2012, non-grandfathered health plans and policies must provide first-dollar coverage for the following preventive services for women (i.e., no co-payment, co-insurance or deductible):
− Well-Woman Visits
− Screening for Gestational Diabetes
− Human Papillomavirus (HPV) vaccinations
− DNA Testing for Women Ages 30 and Older
− Sexually-Transmitted Infection Counseling
− Breastfeeding Support, Supplies, and Counseling
− Domestic Violence Screening and Counseling
− All FDA-Approved Contraception Methods and
Contraceptive Counseling, however, on this service:
Subsequent guidance provides a one-year non-enforcement safe harbor for religious employers, and insurers will provide FDA-approved contraceptive care directly to participants at no cost to them or to religious employers. Further guidance will be issued in the next year.
$2,500 Limit on Health FSA Annual Pre-Tax Contribution
Effective January 1, 2013, but affects annual limits for non-calendar-year Health FSAs beginning in 2012
Effective January 1, 2013, employee pre-tax contributions to Health FSAs will be limited to $2,500 per calendar year. This annual limit applies regardless of the plan year. For subsequent years, this amount will be indexed to CPI.
Health FSAs beginning after January 2012 are already affected by this annual limit, because the 2012-2013 pre-tax contribution will count against the 2013 maximum of $2,500. Employers may find it easier to impose the $2,500 maximum as of the 2012 plan year, for non-calendar-year plans. E.g., Plan year 4/1/12 – 3/31/13.