NSCA understands the U.S. government’s desire to create affordable and effective healthcare for its citizens. After months of debate, President Obama signed federal health care reform legislation into law on Tuesday, March 23, 2010.
The bill is estimated to provide healthcare to more than 32 million Americans by 2019. Consequently, there are many important factors that business owners need to know about this reform. NSCA will keep you informed of factors that relate to your business as the healthcare reform bill continues to evolve.
NSCA's Health Insurance Solution
Participants enrolled in NSCA's SystemsPlus Health Solutions program, a program that looks and feels like a fully insured plan but is actually a self-funded insurance plan, will avoid the new fully insured federal and state health insurance mandates.
New groups that join SystemsPlus within six months following the enactment of the bill will be grandfathered in accordance with the new legislation and avoid the new mandates; after the initial six months, new groups entering the program will have to adhere to the new self-funded insurance plan mandates. SystemsPlus is federally mandated by ERISA. Learn more or get a quote.
SystemsPlus also works with Groom Law Group, a leading employee benefits law firm. Read Groom's latest publications.
What Health Care Reform Legislation Means for NSCA Members
Q: Which bills did the House of Representatives approve on March 21?
A: Two measures were passed. One was the measure the Senate approved last December, H.R. 3590. The second bill, described as a reconciliation bill, includes changes to that measure.
Q: What’s next for the bill?
A: The reconciliation bill must be passed in the Senate, unless there are changes to the federal budget. If there are changes, then it will be sent back to the House for consideration. It is hoped that this bill will be completed and voted on prior to the Congressional “Easter Recess,” but many experts believe it could be approved as late as the second week of April.
Q: Would the tax apply to all health care-related coverages?
A: No. Dental and vision care premiums or costs would be excluded.
Q: When does the new excise tax go into effect and what are the thresholds?
A: Starting in 2018, a 40 percent excise tax would be imposed on health insurance premiums exceeding $10,200 for single coverage and $27,500 for family coverage. The tax trigger will be slightly higher for plans covering retirees or employees in certain high-risk industries. In 2019, the thresholds rise to match the increase in the Consumer Price Index, plus one percentage point. In 2020 and beyond, the thresholds will increase to match rises in the index.
Q: Who’s expected to pay for this new tax?
A: The tax would be paid by insurers for fully insured plans and by plan administrators for self-funded plans. Most experts agree the bulk of these costs will be passed on to the consumer.
Q: What is the penalty on employers not offering health care coverage?
A: Beginning in 2014, employers with at least 50 employees would be assessed an annual penalty of $2,000 for each employee to whom they do not offer coverage. In calculating the amount of the penalty, the first 30 employees would be excluded.
Q: What’s the penalty and parameters of employer-provided coverage that is not deemed to be "affordable"?
A: Beginning in 2014, a penalty of $3,000 per employee per year would apply. However, in order to trigger the penalty: The share of the premium paid by the employee would have to exceed 9.5 percent of income and the employee would have to use federal insurance premium subsidies to purchase coverage through a state health insurance exchange.
Q: What is the effect of the bill on flexible spending accounts?
A: Starting in 2013, a $2,500 cap on contributions to flexible spending accounts will go into effect. After 2013, the cap would be increased to match the rise in the Consumer Price Index. Presently there is no annual limit. However, employers typically impose limits between $4,000 and $5,000 per year.
Q: For employers offering retiree prescription drug coverage actuarially equal or richer than Medicare Part D, who have received a tax break since 2004, does the new legislation take this tax break away?
A: Beginning in 2013, the legislation will reduce the tax break. Employers still will be eligible for the subsidy, which will continue to be tax-free. However, employers will not be able to take a tax deduction for retiree prescription drug expenses for amounts equal to the subsidy.
Q: What changes affecting health care plan design would go into effect in the coming months?
A: Within six months after enactment of the legislation, group plans will be required to extend coverage to the adult children, up to age 26, of employees if the adult child is not eligible to enroll in another group plan. In addition, group plans can no longer have lifetime benefit maximums and no restrictive annual limits, as defined by regulations. In 2014, waiting periods exceeding 90 days would be banned, as would annual dollar limits on benefits.
Q: Are self-funded plans being affected by the same number of mandates as fully insured carriers?
A: No. There are fewer mandates on self-funded plans, such as NSCA’s SystemsPlus™ Insurance Solutions. Moreover, self-funded plans that are in effect within six months following enactment of the bill will be “grandfathered” in.
Q: Is there a federal law that states the minimum number of employees an employer must have in order to self-fund its medical risk?
A: No. Presently, there is no minimum number of employees an employer is required to have in order to become self funded. Plans that are in place within six months from the enactment of the bill will be “grandfathered” in.
Some of this information was filed by Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.
Legislative Efforts
The U.S. Senate introduced three bills associated with healthcare reform: "America’s Healthy Future Act of 2009" (S 1796), the "Affordable Health Choice Act" (S 1679) and the “Patient Protection and Affordable Care Act” (H.R. 3950) that was passed on December 24, 2009.
The U.S. House introduced a series of bills throughout the summer, culminating in the release of the “Affordable Health Care for America Act” (H.R. 3962), a summary of the previous bills that passed in the House on November 7, 2009.
On March 21, the U.S. House passed an amended version of H.R. 3950, the “Health Care and Education Affordability Reconciliation Act” (H.R .4872) and will be sent to Senate for final approval and onto the White House for President Obama’s signature.
Additional Resources