Happy Anniversary – Health Care Reform One Year Later
By Barran Liebman
Oregon law firm
On March 23, 2010, President Obama signed into law the health care reform bill, popularly known as “Obamacare,” after being passed by the Senate and House as the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act. This alert provides a summary of what has occurred, what is next, and where health care reform is likely going in the future.
What Has Occurred
Health plans have already or will over the next few months (first plan year beginning after September 23, 2010) begin:
• Coverage for dependent children up to age 26;
• Removal of lifetime limits and restricted annual limits for essential health benefits;
• Limitation of rescissions of coverage to fraud or misrepresentation;
• Removal of preexisting conditions of children under age 19;
• Restricting reimbursements from FSAs for over the counter drugs;
• Determining if the health plan is integrated with dental and vision plans, requiring compliance with health care reform for dental and vision plans; and
• Determining if the plan is grandfathered and if not:
– Providing preventative care without co-payments or cost sharing;
– Following appeal and external review rules; and
– Providing primary care provider choice.
Significant regulatory guidance has been released over the past year clarifying the rules regarding grandfathered plan status, claims review provisions, and preexisting conditions. Additional guidance has also delayed the imposition of certain claims review provisions, nondiscrimination testing in insured health plans, and Form W-2 reporting of health care costs.
What is Next
The next two years are likely to bring limited legislative changes and the regulatory agencies are likely to issue interpretive regulations on the specific reform provisions. Most notably, regulations defining what is preventative and defining essential health benefits.
Employers will also begin to prepare to issue the Summary of Benefits form in 2013 which will look similar to:
The States will begin to structure their health care exchanges to prepare for the effective date of January 1, 2014, and the likely eventual Supreme Court case on the constitutionality of health care reform will be heard and ruled upon.
Future for Employers of Health Care
If the legislative and regulatory changes to health care reform do not change the broad structure of the law, the Supreme Court upholds the constitutionality of the broad structure of health care reform, and the States provide the exchange system on a timely basis, employers should begin to evaluate their health care plans in 2012 and 2013 and determine whether offering a plan will make sense based on the following:
1. The nondiscrimination provisions that will apply to insured plans will make it difficult to provide different benefits either through different entities or for different portions of the workforce, and employers with exclusions or different health plan benefits should evaluate the impact of the regulations;
2. The financial penalty on the employer for not offering health insurance will be $2,000 per employee or $3,000 per employee who purchases insurance through the exchange and qualifies for government cost sharing in purchasing that insurance (depending on the employer’s plans), and most employers spend more than $2,000 or $3,000 per employee per year on providing health care;
3. Based on the upcoming regulations defining essential health benefits, employers may find it beneficial to self-fund an essential health benefits only plan and either provide 100 percent employee paid buy-up options or allow employees to use the exchange to buy additional coverage, saving the employer the $2,000/$3,000 per employee penalty; and
4. Compare the above financial concerns with the workforce recruitment and retention value of employer-provided health care.
Due to the uncertainty of the legislative, regulatory, and judicial process we recommend employers look at health care plans on a broad strategic level, avoid any major changes until at least late 2012, and keep abreast of the regulatory guidance as it is issued.
Electronic Alerts are written by Barran Liebman attorneys for their clients and friends. Alerts are not intended as legal advice, but as employment law, labor law, and employee benefits announcements. If this has been forwarded to you, and you would like to begin receiving Electronic Alerts directly, please email Traci Ray at [email protected]. Copyright © 2011 by Barran Liebman LLP.
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