by Cynthia Price
Legal News
There is still much work for the Obama administration in clarifying the provisions and proposing the rules to implement the Patient Protection and Affordable Care Act (PPACA) and the Health Care and Education Affordability Reconciliation Act (HCEARA), together known as Health Care Reform.
There is now clarity on some of the major provisions, according to Mary Bauman of Miller Johnson, speaking in July to the members of the Labor and Employment Law Section of the Grand Rapids Bar Association.
What seems clearest is that employers will be undergoing some major changes in the way they provide health benefits to those who work for them. What is less clear is the schedule on which some of the changes will take effect.
Many start as of “the first day of the first plan year beginning at least six months” after PPACA and HCEARA were enacted in March 2010. In general, this will be Jan. 1, 2011.
Some of the most major provisions will not apply until 2014.
And then there is the gray area of “grandfathered” plans. Even requirements, such as coverage of dependent children, that will kick in for other plans as of 2011 may not apply until 2014 for the grandfathered plans which are those in effect on the date the bills were enacted.
The problem with that, Bauman explained, is that any changes made to the group health plan will jeopardize the grandfathered status. The provisions about grandfathering are in three places between the two bills (the HCEARA having been passed about a week after the other), so more guidance is expected.
That is also true of the new dependent child mandates. Employers must now cover an employee’s children up to the age of 26, whether they are married or unmarried.
How this will be handled by the Internal Revenue Service, and how an employer must define dependent child in light of either tax or other factors, are still moving targets.
The laws prevent lifetime dollar value limits for “essential health benefits.” As of now, detailed delineation of what those entail is forthcoming, but the general categories are: ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder services, behavioral health treatment, rehabilitative and habilitative services and devices, laboratory services, preventive and wellness services, chronic disease management, and pediatric services.
Section members considered whether setting limitations on the number of visits per year might be a method for cost containment, but many doubted that will be allowed.
Another area in need of some further guidance is the Small Employer Tax Credit, which starts this year. To qualify, an employer must have no more than 25 full-time employees with average annual wages of less than $50,000. The allowable tax credit now through 2013, with some disclaimers, is up to 35% of the employer’s contribution toward health care coverage. For tax years 2014 and after, the credit increases to 50%. There are special provisions for employers with 10 or fewer employees and average annual wages of less than $25,000.
There is a greatly increased reporting burden on all companies, though Congress is even now considering repeal of some of the more onerous provisions.
The bills strengthen the ban on precluding health care payments for preexisting conditions, eliminating them as a factor entirely.
Bauman said that though HIPAA (Health Insurance Portability and Accountability Act) as passed in 1990 is primarily known for its patient privacy mandates, that act started the process of eliminating consideration of preexisting conditions.
PPACA eliminates preexisting conditions but not until 2014. Some prohibitions start to take effect in 2011, with respect to children under age 19.
One of the most far-reaching provisions of the acts is the establishment of a state health care “exchange” by 2014. The exchange will function as a clearinghouse to help people find health insurance, both as individuals and in groups. The expectation is that the exchanges will be web-based.
There are several provisions to help low-income people pay for these health benefit packages. There will be an expansion of Medicaid.
After 2013,. individuals not covered by their employers who choose not to enroll in health insurance plans will pay a penalty, which will be either a flat dollar amount, which increases until 2016 and is subject to cost-of-living adjustments, or a percentage of household income, whichever is greater.
Employers will also have to pay penalties for not offering health coverage, though only those who have more than 50 full-time employees (considered to be those who work 30 or more hours per week). Though it is complicated, employers who have no health plan benefits or whose health insurance plans are not affordable will pay $2,000 per full-time employee per year.
Section members present wondered whether the employer penalties will be enough to act as a disincentive for not offering health care coverage.
A few more minor regulations of the health care reform acts mentioned by Bauman include regarding pediatricians and obstetrician/gynecologists as primary care physicians, and the inclusion of all stages of clinical trials as something insurance must cover.
In answer to a question, Bauman said that she does not predict successful repeal of PPACA and HCEARA, though if there is a change in the composition of Congress there may be modifications, thereby adding to the confusion.
As it becomes more and more evident that health care reform is complex and open to shifting interpretations, there will be increased need for employers to seek the assistance of attorneys with expertise. Bauman said that the group of attorneys working at Miller Johnson welcomes calls for further clarification.
Many other local firms have started health care reform practice groups. A new one at Warner Norcross and Judd includes well-known attorney Sue Conway (see Grand Rapids Legal News, 9/16/09), who comments, “While these changes are being phased in gradually, individuals and businesses cannot afford to postpone planning for the necessary changes to their employee health plans.”
According to chair Norman Hawkins of Dickinson Wright, the Sept. 14 meeting of the Labor and Employment Law Section is not to be missed. Chet Byerly of the National Labor Relations Board will give a presentation on that board’s future policies and operations under the Obama administration, likely to be quite a turnaround from the re. Please visit www.grbar.org for registration information.
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