The new federal health care law will mean major changes for employers over the next few years – changes that could significantly affect the way we do business.

Smart employers will begin taking steps now to comply with the new rules and to think strategically about how to survive and thrive in the post-health reform marketplace. starting early and staying informed, employers will be ready for the long and winding road ahead.

Developing a basic knowledge of these changes is critical for employers, who need to implement the new law cost-effectively. Some requirements are straightforward; others require a thorough examination of the employer’s options under the law.

Below are some of the important provisions affecting employers that become effective in the next 12 months, and an explanation of the pay-or-play provisions and the likely effect they will have on employers.

Effective Sept. 23, the following provisions must be included in any employer-based plan that does not meet the test for a “grandfathered plan”:

• Coverage for children up to age 26.

• No cost sharing on preventative services.

• Restrictions on annual limits.

• No lifetime limits.

• Preventive care requirements.

• Nondiscrimination testing applies to insured group health plans.

• No waiting periods over 90 days.

• No pre-existing condition exclusions.

• Women must be permitted to use an obstetrician-gynecologist of their choice.

• New required benefit summaries.

Importantly, many of these provisions will apply even if a plan is grandfathered.

Effective March 23, 2011:

• Health care expenses paid under an employer plan for any child of an employee under age 27 become pre-tax.

• Employers with more than 200 full-time employees must automatically enroll new full-time employees in their health plans. Employees may opt out of the coverage.

Effective for tax year 2010:

• Certain small employers will get a tax credit for amounts they pay toward employee health coverage. The credit amount will vary on a sliding scale.

Starting June 1, 2011:

• A temporary reinsurance subsidy will apply to certain early retiree health plans.

Starting in 2011:

• “Simple cafeteria plans,” featuring relaxed nondiscrimination testing, will be available to small employers.

• W-2 reporting for the value of employer-provided health insurance will be required.

• Over-the-counter medications will generally no longer be reimbursable from health reimbursement accounts, health savings accounts, medical savings accounts and flexible spending accounts.

Effective Jan. 1, 2014, employers with 50 or more full-time employees will be subject to the pay-or-play rules.

Here are the details:

What coverage must be offered? An employer must offer affordable minimum essential coverage to all of its full-time employees and must pay at least 60 percent of the cost. A detailed definition of “minimum essential coverage” has yet to be provided.

What triggers the excise tax? The excise tax is triggered when at least one full-time employee purchases coverage through a state exchange and receives a tax credit or cost-sharing reduction.

How much is the excise tax? If the employer does not offer coverage to any of its employees, it will pay $2,000 per year per full-time employee (minus a threshold number of 30). The excise tax is increased to $3,000 for an employer who offers coverage but nonetheless has at least one employee receiving a tax credit or cost-sharing reduction. The $3,000 excise tax, however, applies only to employees who receive the tax credit or cost-sharing reduction.

Free-choice vouchers. After 2013, employers offering coverage must provide certain qualified employees with a free-choice voucher, whose value may be applied to the purchase of health coverage through a state exchange.

The value of the voucher is equal to the portion of the cost the employer would have paid if the employee had participated in the employer’s plan. Employers providing free-choice vouchers will not be subject to excise tax for employees who receive a voucher.


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