By McKenna Long & Aldridge LLP
The following checklist is intended to provide a list of common steps that plan sponsors should consider in preparing for compliance with health care reform for 2013 and later years. The list is not intended to be all-inclusive and assumes all required compliance steps were taken during 2010 through 2012. You should review your own plan's terms and consult your legal counsel to determine the actual steps needed for your plan.
Step 1: Complete the following for each plan covered by health care reform.
Tasks to Prepare for 2013
_ Determine if plan is still "grandfathered" (was status lost due to changes in benefits, premiums, etc.?).
_ If grandfathered, provide annual "grandfathered plan" notice.
2. Phase-in of Annual Benefit Limits:
_ Identify plan's current annual limits and their application to essential health benefits (EHBs) and make sure limits do not exceed maximum for the 2013 year plan ($2,000,000 for plan years beginning 9/23/12-1/1/14).
_ Amend plan documents and insurance policies to modify/remove limits.
_ Consider impact of changed annual limits on mental health benefits (mental health parity applies to plans covering 50 or more employees) and coordinate coverage.
_ Schedule to amend plan documents and insurance policies to remove all limits on essential health benefits (EHBs) by 1/1/14.
_ Determine if requirement applies to you (250 Form W-2 threshold).
_ Identify employer-sponsored coverage that must be reported annually.
_ Decide how to calculate aggregate cost of coverage.
_ Make sure payroll system is properly tracking, since 2012 is the first year being reported (on 2012 IRS Form W-2 due 1/31/13).
_ Schedule to be provided in late summer/fall 2013 and then annually and upon new hire.
_ Determine who will provide and how.
_ Include in new hire packet.
_ If calendar year plan, make sure you comply by 1/1/13 (if non-calendar year plan, mandate took effect in August 2012).
_ Determine who prepares and provides - insurer will normally provide for insured coverage; self-insured must make arrangements with third-party administrator (TPA).
_ Add to open enrollment package and schedule to provide at least thirty days before plan year begins.
_ Add to new-hire packets (or initial enrollment packets, if waiting period).
_ Coordinate with IT to determine whether and how to post summary and required link to glossary of terms website.
7. Advance Notice of Benefit Changes:
_ Provide written notice of midyear material modifications at least sixty days in advance to all eligible individuals.
_ Consider whether board meetings or other decision-making processes need to be moved earlier to allow enough time for notice (especially important if insurance policy year differs from plan year).
8. Plan Fees:
_ Determine how you will track, report and pay the applicable comparative effectiveness (first due 7/31/13) and transitional reinsurance (first due as early as late 2014) fees.
_ Identify plans treated as separate plans for purposes of the fees and whether it is possible to avoid these duplications.
_ Include fees in your budget.
_ Applies to plan years beginning on or after 1/1/13.
_ Make sure communications reflect new limit.
_ Amend FSA plan document retroactively by 12/31/14.
_ Consider whether to have limit automatically increase when IRS approves COLA (you must track and modify your open enrollment materials) or simply adopt fixed amount (you will have to amend in the future if you want to increase).
10. Pay or Play Rules:
_ Decide if you will be subject to the pay or play rules (fifty or more full-time equivalents) in 2014.
_ Determine if there are steps you need/want to take in 2013 to avoid coverage by pay or play rules or minimize impact.
_ Decide if you need to use measurement periods to identify full-time employees and, if so, (a) modify payroll systems to track, and (b) make sure plan and insurance policies accurately reflect.
_ Decide whether to exclude certain groups through company restructuring, excluding Medicaid-eligible, or enforcing part-time limits.
Tasks to Prepare for 2014
_ Review all waiting periods for enrollment.
_ Amend plans as necessary to shorten actual plan entry date to within ninety days of hire.
_ If different waiting periods, consider impact on nondiscrimination testing.
_ If using "initial measurement period" to determine full-time employees for pay or play.
_ Amend plan documents and insurance policies.
_ Provide written notice to participants and eligible individuals.
13. No Annual Limits:
_ Remove all limits on EHBs by first day of first plan year beginning on or after 1/1/14.
_ Decide whether to implement.
_ Modify processes and materials to reflect.
15. Pay or Play Rules:
_ Review plan(s) to confirm they satisfy minimum essential coverage rules.
_ Decide what method you will use to calculate whether plan coverage is "affordable" (is the employee-only premium less than 9.5 percent of your lowest paid full-time employee's W-2 wages?).
_ Decide what changes you need/want to make to dependent and spousal coverage, based on coverage requirements and affordability requirements.
_ Make sure your measurement periods and waiting periods are working properly.
Not Yet Due, But Keep in Mind
_ Identify executive medical plans and determine if they discriminate.
_ Check separation, employment, and change-in-control (CIC) agreements for promises of post-separation health coverage that exceed basic COBRA (may create violation) or provide company payment; amend documents, if needed.
_ If self-insured, make sure you have already taken the above steps (you are already subject to similar rules).
17. Automatic Enrollment:
_ Determine if requirement will apply to you (do you have more than 200 full-time employees?).
_ Monitor guidance for effective date.
_ Discuss expected changes with TPA/insurers (e.g., notices, opt-out process).
_ Plan to amend documents, insurance policies, and enrollment materials.
18. 2018 Cadillac Tax:
_ Determine whether any of your plans are likely to trigger the excise tax on cadillac health plans.
_ If so, begin communicating now with covered individuals so that they are not surprised when coverage levels need to decrease in the future
Step 2: Continue to monitor the guidance being issued and train HR/benefits personnel to answer questions about the impact of health care reform on plans. If self-insured, be sure to amend stop loss policy to reflect plan changes.
About the author:
McKenna Long & Aldridge LLP is an international law firm with more than 575 attorneys and public policy advisors in thirteen offices and eleven markets. The firm is uniquely positioned at the intersection of law, business, and government, representing clients in the areas of complex litigation, corporate law, energy, environment, finance, government contracts, health care, infrastructure, insurance, intellectual property, private client services, public policy, real estate, and technology. To learn more about the firm and its services, please visit the firm's website.