What Health Care Reform Means to Employers
One more impressive step has been taken toward health care insurance reform in the United States. The requirements of the monumental bill will be phased in over several years and tens of thousands of pages of regulations will be issued over time. For the time being, EANJ summaries the major points of interest and responsibility for employers.
Nearly every American will be required to have health care coverage by 2014. Employers that provide health insurance will need to sponsor a “qualified health plan” that will guarantee essential health care benefits. Employers are required to report annually to the IRS.
Employers with 200 or more employees are required to auto-enroll new full-time employees, with adequate notice and opportunity for an opt-out. Should an employee opt-out, they will pay a penalty and be required to purchase coverage elsewhere. The employer must inform all employees of their coverage options, including the existence of a state-operated Insurance Exchange.
Individuals and employers with 100 or fewer employers will be able to purchase health care plans through the Insurance Exchange in 2014, the purpose of which is to require insurers to pool the risk of all enrollees in the Exchange. Employers with over 100 employees may be allowed to participate in 2017.
Employers with fewer than 25 employees and average annual wages of less than $40,000 are eligible for a sliding scale tax credit to purchase health care insurance.
Americans with incomes up to 400% of the federal poverty level ($88,200 for a family of four) will be eligible for a subsidy to purchse health care insurance. Employers with more than 50 full-time workers that do not provide health care insurance will be assessed a penalty if employees receive a subsidy to purchase insurance on their own. Employers with 50 or fewer employees are exempt from this penalty, although part-time workers are included in the calculations, counting two part-timers as a full-time employee.
The non-coverage penalty is $2,000 per full-time employee, which would be assessed on the company’s entire workforce, not just on the employees that are receiving a subsidy. In calculating the penalty, the first 30 full-time employees are excluded (ie: a firm with 51 employees that does not provide coverage will pay an amount equal to 51 minus 30, or $42,000, if the government subsidizes employee coverage.)
For employers that do not provide coverage to employees, it is likely that many, if not most, employees will be eligible for a subsidy to purchase health care on their own. The non-coverage penalty increases with the size of the employer.
There is no penalty for employees in a waiting period, although a waiting period cannot exceed 90 days.
Most employers are required to report health care coverage data, including employee census data, to the U.S. Department of Health and Human Services.
Federal discrimination statutes and the Fair Labor Standards Act are amended. An employer cannot discriminate because of participation in or the denial of benefits under any health program or activity or because of receiving a government subsidy. Employees are protected from retaliation for reporting health care fraud.
The FLSA has also been amended for employers with 50 or more employees to require granting an unpaid break to an employee for the purpose of expressing breast milk. The employer must also provide a private and safe place other than a rest room for this activity unless to do so imposes an undue hardship.
Employer-sponsored wellness programs are encouarged. Employers can give a participation award up to 30% of the cost of coverage in the form of premium discounts or waiver of co-pays.
All existing health insurance plans would be subject to several reforms. More specifically, the legislation would:
- prohibit lifetime limits and rescissions;
- restrict annual limits;
- place limitations on excessive waiting periods; and
- require certain plans to provide coverage for dependent children up to age 26.
With or without Health Care Reform, employers must learn to drive a better health care bargain, lower health care costs with wellness programs, increase employee engagement and productivity, and comply with HIPAA privacy.
EANJ’s Annual Meeting on May 19th convenes a Blue Ribbon Panel of experts.
