What exactly will be changing as a result of the health care reforms?
Some changes have gone into effect already. There are a whole host of reforms that are effective for plan years on or after Sept. 23, 2010 (Jan. 1, 2010 for calendar year plans). Some of the changes include:
- Protection from insurers rescinding existing coverage.
- Eliminating lifetime limits.
- Eliminate pre-existing conditions for children under age 19, eventually extended to all.
- Extend dependent coverage to age 26, in Ohio to 28.
- A group health plan can only impose annual limits on the coverage for essential health benefits that exceed a ‘restricted annual limit’ that is to be determined by the Secretary of Health and Human Services.
- Establishment of high-risk pools for individuals unable to obtain coverage due to their health status.
Also, starting Jan. 1, 2010, expenses incurred for over-the-counter (OTC) medications will no longer be eligible for payment/reimbursement through an FSA, HRA or Archer MSA.
What reforms should businesses look for in the future?
Effective Jan. 1, 2012, there is a change to Form 1099 reporting. Form 1099 must be provided to service providers that receive more than $600 for services to a plan for a calendar year. The Medicare Payroll Tax Increase, a new tax that helps pay for Medicare, will become effective Jan. 1, 2013.
Also, beginning in 2014, employers with more than 50 employees will be mandated to provide health insurance. Health insurance exchanges will be created at some point — probably also in 2014.
How will those exchanges change the way businesses buy health insurance?
Quite honestly, what’s going to happen is that you’ll see some smaller businesses drop insurance altogether. They will stop providing it and move toward allowing their people to purchase insurance on these exchanges.
In a recent Virginia state case, a judge found the mandate to purchase insurance unconstitutional. That is just one decision out of many, but is still something to keep an eye on.
What can businesses do to make sure they are in line with these changes?
This bill is very comprehensive; it’s also very cumbersome. Employers are going to find that they will need a lot of help, not only from their human resources and benefits departments in disseminating the information to employees, but also in getting information from their attorneys or whomever else they can have advising them about the reforms.
If employers want to keep their current plan, they could try and maintain ‘grandfathered’ status. However, I think people are going to find that it is next to impossible over time to maintain that status because, if you have to make certain changes to your plan, like modifying the amount people pay, your plan will lose its grandfathered status. The ability is there on paper, but it will be tough to do in practice.
Jeffrey Porter is a director with Kegler, Brown, Hill & Ritter. Reach him at (614) 462-5418 or [email protected].
