Health Care Reform: 2014 Do’s and Delays
By Marc Pieroni
While shifting deadlines are providing employers additional time to comply with certain key requirements under health care reform, a number of significant changes remain scheduled to take effect this year. Here’s a look at some of the most important do’s and delays that may affect employers and group health plans in 2014:
DO: Limit Waiting Periods to 90 Days
In plan years beginning on or after January 1, 2014, a group health plan may not apply any waiting period that exceeds 90 days. A waiting period is the time that must pass before coverage for an individual who is otherwise eligible to enroll under the terms of the plan can become effective.
DELAY: Nondiscrimination Rules for Insured Group Health Plans
Insured group health plans are not required to comply with certain rules prohibiting discrimination in favor of highly compensated individuals, currently applicable to self-insured plans, until after regulations or other administrative guidance is issued. (Health benefits offered as part of a cafeteria plan remain subject to the nondiscrimination requirements of Section 125.)
DO: Confirm Coverage of Essential Health Benefits and Limit Cost Sharing
Non-grandfathered plans offered in the small-group market must cover a core package of items and services known as “essential health benefits” for plan years beginning on or after January 1, 2014. In addition, non-grandfathered group plans must ensure that cost sharing for coverage provided in network does not exceed certain limitations, including limits on both out-of-pocket maximums and deductibles.
Note: Certain small businesses were permitted to renew existing group coverage for 2014 that does not comply with the requirements to cover essential health benefits and limit annual cost sharing under the plan.
DELAY: “Pay or Play” (Employer Shared Responsibility)
Enforcement of the “pay or play” requirements—which apply generally to employers with at least 50 full-time employees, including full-time equivalents—is delayed for one year, so penalties will not apply until 2015. However, employers using the optional look-back method to determine full-time employee status will need to begin their measurement periods in 2014.
Employers subject to the “pay or play” requirements also will not be required to report certain information regarding health coverage offered to employees until 2015. Such reporting is necessary for the IRS to determine whether a “pay or play” penalty may be due. Employers are encouraged to voluntarily comply with the information reporting requirements during 2014.
DO: Eliminate Annual Limits and Preexisting Condition Exclusions
Annual dollar limits on coverage of essential health benefits are prohibited for group health plans issued or renewed beginning January 1, 2014. In addition, group health plans may not exclude individuals from coverage (regardless of age) or limit or deny benefits on the basis of preexisting medical conditions.
DELAY: Online Enrollment in Federal SHOP Exchange
Online enrollment for small-business employers who wish to purchase employee health coverage through the federally facilitated Small Business Health Options Program (SHOP) is delayed until November 2014. Until online functionality is available, small-business owners may work with an agent or broker to select a SHOP qualified plan and enroll employees. Employers located in a state operating its own SHOP must follow that state’s application and enrollment process.
DO: Ensure Wellness Programs Comply with Revised Rules
For plan years beginning on or after January 1, 2014, wellness programs that require an individual to satisfy a standard related to a health factor in order to obtain a reward must comply with revised nondiscrimination rules. The maximum permissible reward that may be offered under such programs is increased from 20% to 30% of the cost of coverage, and to 50% for programs designed to prevent or reduce tobacco use.
As a reminder, in 2014, employers must continue to provide newly hired employees with a written notice about the Health Insurance Exchange (Marketplace) within 14 days of the employee’s start date. In addition, both grandfathered and non-grandfathered group health plans that cover dependents must make coverage available until a child reaches age 26, regardless of other coverage options.
Marc Pieroni is the Managing Partner of BenefitCorp, a commercial insurance consulting agency founded in 1995. Marc is dedicated to helping businesses implement, administer and communicate all lines of insurance and financial products. Please call Marc at 972-480-0109 www.benefitcorp.com
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